What is DROPSHIPPING ?
In a literal sense, it’s the sale of store stock from wholesalers.
A classic online shop is based on its own warehouse. You have to sign a contract with a wholesaler, buy goods from them, and store them in your own warehouse, which involves first costs related to storage space and secondly freezing a significant amount of money tied up in inventory that you don’t know when it will be sold.
Of course, let’s not demonize this solution because it also has many advantages. However, not everyone wants to freeze a larger amount of cash at the beginning of their activity. That’s why the DropShipping model was created, which has been widely used in the West for years, especially in the USA and has recently arrived in Poland and is becoming increasingly popular.
A shop working with a dropshipping model becomes more popular every day.
WARNING: This model works everywhere, regardless of whether you run your business in Ireland, the USA, Canada, the Netherlands or Germany, and the wholesalers are located either in your country or in Poland. This method does not limit you in any way. Polish wholesalers send goods to individual clients abroad as well, in small orders. The advantage of Polish wholesalers is that you can buy goods at significantly lower prices than in your own country, which allows you to offer free shipping and a more attractive price than buying from wholesalers in your country. Most Polish wholesalers provide product descriptions and names in the language of your country, so you don’t have to translate them manually. You can set any prices that make sense for you and make you competitive on your market.
What is it and what costs does this sales model involve?
The costs you cannot avoid, regardless of whether you want to open a classic online shop or a dropshipping one, are:
1. The cost of purchasing a domain name, i.e., the name under which the online shop will operate – from PLN 60 to 100 per year
2. The cost of hosting, i.e., “server” on which your online shop will operate – from PLN 350 to 700 per year
3. The cost of building an online shop – from PLN 3,500 upwards, depending on functionality, language versions, etc.
Points 1 and 2 are cyclical costs incurred every year, while point 3 is a one-time fee for the online shop to become your property (do not confuse with abonnement solutions).
In both distribution models, these costs are mandatory – there would be no e-commerce without them. However, this is where the similarities end. In the classic sales model, you have to freeze at least PLN 15,000 in inventory to get some decent discounts, plus warehouse rental fees (if you don’t have your own storage space).
In a dropshipping model, costs stop at point 3 and you can start selling right away.
A shop based on DropShipping works as follows:
1. The wholesaler provides an import file containing the full palette of their products, including sizes (for clothing), prices, images, descriptions – everything.
2. We, when building your online shop, integrate the dropshipping module and create a script that imports data from the wholesaler in 100% automatic mode, which will automatically download new products with all related data, including prices, and update previously imported products if e.g., their prices or stock levels change at the wholesaler.
3. You focus on one thing – advertising your online shop, either in social media, Google or any other way, and customer service, i.e., receiving payments and serving customers (informationally). The wholesaler ships the goods to the end customer.
ADVANTAGES?
With this solution, you avoid the risk of freezing cash tied up in inventory (which may not be sold), and the money that would go into inventory can be invested elsewhere, e.g. in good advertising for your online shop.
We integrate wholesalers with any type of assortment as long as they provide dropshipping capabilities, i.e., they have to provide an import file so we can automatically import and update products and stock levels, and they have to handle individual shipments to end customers – this is the essence of a dropshipping model.
Interestingly, if the dropshipping model proves successful and generates profits for you, you can easily convert our shop into a full-fledged one selling your own products without any additional costs. Often, companies start with dropshipping to test whether the business will work out, and then buy larger quantities from wholesalers at better prices and sell them directly.
In Poland, there are many more wholesalers offering DropShipping, we have implemented solutions for Western European companies that built online shops that dispatch goods from Polish wholesalers to their clients abroad, so nothing prevents you from buying goods from a Polish wholesaler (e.g. because they are cheaper) and selling them in your own country – this is the beauty of this method, with minimal setup costs and no geographical limitations regarding distribution.
You can also use local wholesalers in your country – there’s nothing to stop you.
Example integration of a dropshipping wholesaler (click on the image, the online shop will open in a new window)
The beauty of this method is that the online shop does not limit you solely to the assortment of one wholesaler. Today, you sell goods from wholesaler X, and tomorrow you can also sell them from wholesaler Y or both at once – our integration module allows for it.
If you’re interested in this distribution model, please contact us – we don’t want to promote any particular wholesalers’ offers here; if you have a wholesaler you’d like to integrate – we’ll do it; if not, we’ll recommend some options available.
Building an online shop with a dropshipping model takes 2-3 weeks, i.e., the online shop becomes your property – this is not an abonnement solution where you pay hundreds of zlotys per month. What’s more, our online shop does not tie you to us; unfortunately, such practices are common among our competitors who offer very limited sets of options to their clients and then repeatedly invoice them for tzw. maintenance or development.
At Netpoint, you have a shop without limits, managed by you through an easy-to-use graphic panel, and you’re not dependent on any IT services company – this is a huge cost saving in the long run, many times exceeding the cost of the online shop itself.
You don’t know which solution to choose – classic or dropshipping? Give us a call / write – it won’t cost anything. We’ve been in this industry for 12 years and will advise you non-bindingly on which way to go; you don’t have to decide immediately for our offer.
By the way, there’s another interesting solution described in the next article that is no less interesting than DropShipping and even more convenient, as it practically eliminates your need to engage in customer service (:
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