Do you want to be a Dropshipper? but aren't sure how to get started? Hello there, We'll cover everything that you need to know about starting a dropshipping business in India in this article.
The question you'd most likely ask is, "How to start a dropshipping business in India in 2021?" Don't worry, this blog contains all of the answers.
If you want to start an eCommerce business in India but don’t have any experience in that field and don’t have a large capital to start with, then the dropshipping business model is made just for you.
To start a dropshipping business in 2021, you don't need a bunch of teams or employees because here all you have to do is marketing.
In this article, we will be discussing dropshipping in India in detail, and I will also walk you through the different ways to set up your first dropshipping business in India.
So before going in-depth, first we will try to understand what basically a dropshipping model is?
What is Dropshipping?
Dropshipping is the retail business model wherein the seller accepts customer orders but doesn’t keep the products sold in stocks.
The seller transfers the orders and shipping address to either manufacturer, wholesaler, or another retailer which then ships the products directly to the customer.
Quite simple, right?
In the dropshipping business model, the retailer only has to market and sell the products. And has very (little and no control over product quality and shipping).
This business model eliminates the cost of maintenance of the warehouse and employing the staff for managing inventory.
Here are some list of top dropshipping companies in India:
List of Top Dropshipping Companies in India
- Wholesale Box
- Shruti Creation Biz
- Dropship Zone
Hope now you’ve understood what dropshipping business model exactly is? Which is very important for you to understand. Now let’s have a look at the Pros and cons of dropshipping.
Starting a Dropshipping Business in India: Pros & Cons
Pros of Dropshipping Business:
1. Low Entry Barrier:
If you are starting an eCommerce business or a traditional offline business you need to first have a huge capital to develop, manufacture, and manage source products.
And later on, there are more additional costs which get added up like cost associated with stocking inventory, hiring staff to manage inventory and logistics, etc.
But in dropshipping business, the entry barrier is very low because the investment required for starting a dropshipping business is very less.
Here you don’t have to develop your own products or have to stock the product in inventory, you just have to build your own online store which can be created in a minute.
2. No Inventory Management:
As we have already discussed in the dropshipping definition, the retailer doesn’t have to stock the product or sell in the inventory, unlike the traditional retail business model.
In the traditional retail business, the retailer has to purchase and store in inventory the product he/she wants to sell. But what if the products he/she stored in inventory might not sell? Right?
There is a significant financial risk involved in this kind of business model.
But dropshipping business models eliminate those kinds of risks by using third-party inventory and products and making that available to the customers on demand.
3. Eliminate the Need for Offline Store or Warehouses:
The dropshipping business is a kind of eCommerce business where you just have to open an online store.
You also don't need to have your own inventory, nor do you need a warehouse to store it.
Due to the elimination of offline stores and warehouses, the cost of maintenance of dropshipping is very low as compared to that of traditional business.
4. Improved Cash Flow:
In the traditional business, the retailer has to purchase the products, wait for them to get delivered, and finally sell them to the customers.
In this kind of model, the retailer spent a lot of his/her money stocking the inventory without any guarantee of recovering it.
Due to this, the retailer left with no money to spend on marketing.
But in dropshipping, you have to pay your supplier after the product gets delivered to the customers.
This frees up the cash that you can use in your marketing and growth.
5. Easy to Experiment with New Products:
Coming up with new products in the market is very important to keep customers engaged.
But many business owners fear investing time and money in new products because there is no guarantee that the new products they are going to launch will be successful or not?
But in dropshipping, you can experiment with new products easily and with zero risks. Because in dropshipping you can test new products with very little investment, and no investment in some cases.
And if you think that the customers are not responding to the products according to your expectation then you can remove the product from the store anytime.
6. Good Source of Passive Income:
Passive income is any income that one earns without doing much effort. In dropshipping, you only have to focus on marketing and sales.
You don’t have to manage inventory and logistics since the orders are fulfilled automatically by a third-party supplier.
Marketing a dropshipping business doesn’t require lots of effort; you just have to run ads where people spend most of their time and that is Social media and Google.
Cons of Dropshipping Business in India:
Because every coin has two sides, there are certain drawbacks also we can see in dropshipping business.
1. Highly Competitive:
As we discussed earlier the entry barrier is very low in dropshipping, this gives rise to huge competition.
Things get worse because you don’t have exclusive deals with your suppliers. That means lots of drop shippers are selling the same product.
They might sell them at a cheaper price than you, so why will a customer buy from you? Right?
2. Low-Profit Margin:
The cost of managing a business is low in the dropshipping model since you don’t have to manage and store inventory, but the returns are also low.
If you want to generate a good amount of profit then you have to do a lot of selling also. The more you sell the goods the more profit you can make.
Since dropshipping is highly competitive, the drop shippers try to sell the same product from the same supplier as cheaply as they can.
And to survive in the competition you also have to cut down your profit, where you may end up losing all your money.
3. Difficult to Build a Brand:
In the dropshipping business, you don’t sell your product, you sell someone else’s product therefore it is very difficult to build an e-commerce brand for dropshipping.
You need a differentiating factor to set yourself out from your competitors while developing a brand.
But in dropshipping, everything is pretty same, the quality of your and your competitor’s product is the same, the whole shopping is the same because the suppliers are the same.
4. No Control on Product Quality and Supply Chain:
In dropshipping the total control of the product quality and supply chain is in the hands of suppliers.
In traditional e-commerce, if the customer complains about the product quality you can address the problem yourself.
But in dropshipping, you first have to get in touch with your supplier to solve the problem.
If the supplier takes too long to solve the problem, the customer may get frustrated and he won’t shop anymore from your store.
Nowadays, customers are very impatient. If they order something today, they want it to get delivered tomorrow itself.
If your supplier is delaying the shipments, you may get in big trouble.
And if the customers start posting their bad experience, those bad reviews at the earlier stage of your business, it may end up before it even started.
Now once you know the pros and cons of dropshipping business, now it’s time to go through the steps of starting a dropshipping business in India in 2021.
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How to Start a Dropshipping Business in India?
1. Plan Your Business:
Planning is the most crucial part of starting any kind of business nowadays.
Before starting a dropshipping store, you must first plan how your store will operate? How will you plan your business structure? Something like this.
You have to decide whether you are going to make your own website or rely on the e-commerce platform?
Register your business and complete all the legal formalities.
Customers will know that you are a legal business and that it is absolutely safe to buy things from you if you register your business and fulfill all of the legal processes.
2. Find Your Product Niche (Category):
Find a niche that has a good audience and which goes trend from time to time.
Choosing a niche you love and are passionate about is good if the niche is in the trend otherwise it is a bad idea.
You can use google trends for your research to find which products are in trend.
Do the market research and analysis to find out which products are performing well in the online market?
You should also do some competitive analysis to figure out what your competitors are selling and at what price?
3. Find a Product Supplier:
Now once you have finalized a niche it’s time to find a wholesale supplier for your niche.
After finding some good wholesalers get in touch with them and start evaluating them.
Order the products from them and document your whole journey from ordering the product to getting it delivered.
You should focus on the points like how the wholesaler is communicating? And at what speed? The shipping time of a wholesaler, and the wholesale price.
Ideally, you should make a 30% profit margin on each product you sell and you have to offer affordable pricing to your target audience.
4. Build Your Website:
There are many e-commerce platforms that help people like you to start an online business and create their own brand.
E-commerce platforms provide you with a built-in website template and a secure payment gateway.
Marketing your dropshipping business is the most crucial step. You have to build a great marketing strategy based on your target audience.
You should use as many channels as you can to market your business. Even you can use Facebook and Google to run targeted ads.
You should use different social media platforms to promote your business. No doubt, social media is one of the most effective ways to promote your business.
You should also focus on SEO so that you can rank higher in the search engine results.
How to Start a Dropshipping Business in India? Wrap Up!
Starting a dropshipping business is a very good step to enter into the internet market and you should definitely proceed with it.
I would like to add that you can't become a successful Dropshipper overnight unless you're selling something completely unique and rare.
The great part about dropshipping is that you can get started quickly and with very little investment.
FAQs on Dropshipping Business in India:
Because you are not responsible for shipping or manufacturing, dropshipping can be a profitable business strategy for you. It is also a low-risk business concept.
The majority of drop shippers make roughly 30% of their total sales or 30% of their profit. If a friend claims to have made ₹1,00,000 from their dropshipping business, around ₹30,000 of that is profit.
Yes, dropshipping has the potential to cause significant financial loss. While many gurus promote dropshipping as the ideal business with no risk, it is anything but it is far from that.
Most probably, No, To start selling or dropshipping, you technically do not need a business licence. It's simple to get started with a selling platform like Shopify. You simply log in, make an account, enter your bank account and social security number, and begin selling.
The majority of the time, you won't have to pay sales tax on the orders you place with your suppliers. This is because purchases made for resale are excluded from paying sales tax.
- Kitchen towels
- Household storage containers
- Handheld device accessories
- Motor vehicle carpet and upholstery
- Bike saddles
- Bookcases and standing shelves
I have explained everything about dropshipping in India in this blog. I hope you now have all of the answers to your queries regarding starting a dropshipping business in India.
Leave a comment if you have any questions that aren't addressed in this blog. We will get back to you as soon as possible.
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