What is Drop Shipping Business?
In this article you will get more information about drop shipping business in Nigeria and how to make cool cash with this business model.
Definition of Drop Shipping ?
Drop shipping is a form of retail business method where a store/person doesn’t keep the products it sells in stock. Instead, when any store sells a product using the drop shipping business model, it purchases the item from a third party and has it delivered/shipped directly to the customer. As a result of this, the seller doesn’t have to handle that particular product directly.
Simply defined, drop shipping is a supply chain management method in which the retailer does not have any goods in stock but instead, the retailer transfers the customer orders and shipment details to either the manufacturer of the product, another retailer, or a wholesaler, who then ships the goods directly to the customer.
Most retailers make their profit on the difference between the wholesale price and retail price, but some retailers earn an agreed percentage of the sales in commission, paid by the manufacturer or wholesaler to the retailer.
The retailer in this sense is YOU!!!
Benefits of Drop Shipping in Nigeria
From the definition above you can see that drop shipping is a great business for upcoming entrepreneurs to start in Nigeria because it is quite accessible. When you begin drop shipping, you can test various business ideas with little or no loss, this helps you quickly learn a lot on how to choose and market products that are in-demand.
See more benefits of drop shipping
- Little Capital Involved
This is probably the biggest advantage of this business model. You can launch an ecommerce store without having to invest thousands of Naira in getting products/inventory.
In drop shipping, you don’t have to buy a product unless you have already sold that product and gotten paid by the customer. This means you might not have to spend your personal money to get a product to the final customer.
- Easy to start
You don’t have to deal with physical products when running an ecommerce business, this makes it quite easier.
When you have started your drop shipping business, there are some certain things you don’t worry about-
- Owning or managing a warehouse
- Packing and shipping orders
- Managing stock level
- You can work from any location
Drop shipping business can be run from anywhere with good internet connection. If you are able to successfully communicate with suppliers and customers easily, you can run and manage your business perfectly.
- Wide varieties of products to sell
You know in drop shipping business, you don’t have to pre-purchase the items you sell; this gives you the opportunity to offer an array of trending products to your potential customers. If a suppliers stock an item, you can list it for sale on your online store at no extra cost.
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Disadvantages of Drop Shipping in Nigeria
The benefits we listed above are quite catchy for people interested in the business; however drop shipping has its disadvantages too. The convenience and flexibility you get in operating a drop shipping business in Nigeria comes with a price. Don’t lose hope just yet; it is still a great business model. It is only important to consider some of its limitations.
1. Low profit margins
Low profit margins are the biggest disadvantage in operating a highly competitive drop shipping business. You can get a product for 5,000 naira and sell to the buyer for 5,500 naira. It is important you know products with good profit margins and focus on those ones in order to earn something tangible.
2. Complexities in shipping
If you work with various suppliers, the products you offer on your online store will be sourced through a number of different drop shippers. This will definitely make your shipping cost complicated.
For example, a customer places an order for three different items, all of which are available only separate suppliers. You are going to have three separate shipping charges for sending each item to the customer; it’s not the best of choice to pass this charge along to the customer.
3. Mix up in orders
Have you ever taken responsibility for something you know nothing about?
Even the best of drop shipping suppliers make mistakes fulfilling orders. You are the one that would take responsibilities for these mistakes and apologize.
You Must Read- How to Start a Drop shipping Business in Nigeria
We hope this gives you a good insight on what dropshipping is about. Bookmark this page to see HOW TO MAKE MONEY FROM DROP SHIPPING IN NIGERIA.
It requires a lot of creativity to be successful in drop shipping business in Nigeria.
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