Dropship: Side Business Without Risk and Capital

The pandemic has taught us many things, one of which is not relying on one income alone. For example, relying solely on salaries from the office. We need additional income from other businesses or businesses, so that we don't immediately fall when we lose one source of income.

It's like we stand on two legs, if one leg is injured, the other leg will become a temporary support.

Building your own business is one solution to create a second source of income after your main job.

You do not need to imagine a business with a large capital. Because today many businesses are not only minimal risk, but can also be done without capital.

Dropship is one of them, this one business method offers both of the above. This business is similar to being a Reseller, but not entirely the same.

These two things do have something in common, namely selling other people's goods by increasing prices in order to get maximum profit.

In this article, we will discuss the meaning of these two business methods. Complete with each way it works.

Understanding Dropship and Reseller Business

To find out the difference between the two, see the full description below.

Oh yeah, for those of you who need another side job idea, which can be done from home, I've written it here: 15 Ideas and Opportunities for Side Work from Home.

What is Dropship and How it Works

In brief dropship can be interpreted as a method of selling without having to have the goods to be sold.

So when running a dropship business, you don't need to own and stock the items you want to sell. Even to the delivery process, you also don't need to be directly involved.

Oh yes, People who do this business are usually called WL.

Because all buying and selling processes will be carried out by the supplier from the Dropshipper earlier.

Relax, your customers are also guaranteed not to know where the original source of the goods you have sold is from. They may buy goods from your shop.

How Dropshipping Works

In the dropship business, there are several parties that play an important role.

  • Supplier – Is a provider of goods to be sold
  • Dropshipper – is the party who sells the goods belonging to the supplier
  • Buyers – People who buy goods from dropshippers

You don't need to think about the supplier, because they've already made a profit. What you need to think about is how much profit margin you want to get.

Example:

Beg has a product in the form of shoes, with a selling price of Rp. 350.000 rupiah.

You as WL If you are interested in selling the supplier's shoes, all you need to think about is how much profit you want to get.

Before determining the price, you should understand the quality of the goods you want to sell. Have a market price reference. Usually the profit margin you can use is 10% – 20%.

Say you take advantage 10%, then you can sell the shoes at a price of Rp. 350.000 + IDR 35.000 = IDR 385.000 Rupiah.

When Buyer interested in the products you offer, then they will pay the amount of Rp.385.000. After the purchase is confirmed, you can buy it from the following supplier with the buyer's address details.

From here you just sit back and relax, because the delivery process will be handled directly by the supplier.

Easy isn't it?…

What is a reseller and how it works

Being a reseller means that you are an agent of a product that you want to resell. Through several agreements between the reseller and the product owner.

You need to buy a number of products that you want to sell first. Not only that, you will also take care of the sales process to delivery independently.

How Resellers Work

In the reseller business, there are approximately the same number of players as the dropship business.

  • Supplier – As Product Owner
  • Reseller – The party who will be the seller of the supplier's product
  • Buyers – People who buy products from resellers.

Advantages and Disadvantages of Dropship vs. Reseller Business

dropship vs reseller

From the explanation above, it is clear that the basic differences between these two businesses can be seen. Below is a detailed breakdown of the differences between these two business methods.

Advantages of doing business with the Dropship method

Minimal Cost and Risk

Yes, as explained earlier, with the dropship system, you only need to spend money only when the item sells.

That way, you will only buy items that have a clear buyer. When the item being promoted gets a buyer, that's when you just buy from the supplier.

Saving time

This is an advantage when you have to focus on the main job. Because with this method, you can sell anywhere with the help of gadgets and PCs.

In addition, you don't have to worry about packaging and shipping goods. Because it will be handled by the supplier directly.

Your focus in running this business is how to sell as many products as possible.

The more buyers, the more income!

Disadvantages of doing business with the Dropship method

Not Too Mastery of Merchandise

This happens because you hardly ever see and touch or even try your wares. Because the shipping process does not pass you first, but directly from the supplier to the buyer.

With the dropship method, you only gain knowledge about your product from the supplier's story.

Suggestion:

Before choosing a product to sell using this method, it's a good idea to check the quality first. To reduce the risk of customer complaints, which resulted in your image in the eyes of consumers worsening.

Recommendations For Reading: How to Become a Dropshipper at Tokopedia with Suppliers from Shopee

The Advantages of Doing Business With the Reseller Method

Get to know the product more clearly

Yes, this is one of the advantages of doing business with the reseller method. Why? Because by becoming a reseller, you are required to buy and store your merchandise first before you market it to many people.

By stocking the item in advance, you will understand the texture, material, smell, features, advantages, disadvantages because you can try out your merchandise a little.

Online and Offline is Okay

Because the merchandise is in your hands, you can offer it directly to others online and offline.

You can sell offline by offering products to friends, neighbors and closest relatives.

Bring samples to ensure the quality of the goods to be sold. You need to be aware, selling offline is simpler, because you don't have to think about packing and shipping problems.

Disadvantages of doing business with the reseller method

Must Stock Items in Advance

Stocking goods, is usually an obstacle for someone who wants to start a business. This means that you must have a special fund that is intended to start a business. As an anticipation if the goods are not immediately sold all.

In addition to requiring special funds, where to store goods is the next consideration. You must provide a special place to store the goods you want to sell, to ensure the quality does not decrease when the goods have not been sold.

Potentially High Enough Losses

Because it is mandatory to stock up on large quantities of goods in advance, this method business has the potential to suffer losses.

Yes, even though any business has the potential for losses, when compared to dropship, resellers have a greater potential for losses.

You must research the market potential of the product you want to sell. And also the goods that are sold are goods that have a long enough durability. For example: Shoes, bags, and similar items that have not been damaged in a matter of months.

Independent in Running Sales

Of course, by having the stock of goods in your hands, all the sales process is your full responsibility. Starting from checking, offering, transacting, to responding to buyer complaints, it is your duty as a reseller.

Conclusion

You already know how it works and the basic differences between the two business methods above. Basically all businesses have risks, but by understanding how they work we can minimize the potential risks.

For those of you who haven't been able to manage time well, between your main job and a side business, a dropshipping business is the solution.

On the other hand, if you feel you can manage your time and have sufficient resources, a reseller business is the right choice. Because it can reach more potential buyers in two ways at once, namely offline and online.

Jitendra Vaswani is a Digital Marketing Practitioner & international keynote speaker currently living a digital nomadic lifestyle and founder of internet marketing blog BloggersIdeas.com & Digital Marketing Agency DigiExe. During his more than 8 years of expertise in Digital Marketing, Jitendra has been a marketing consultant, coach, speaker and author of "Inside A Hustler's Brain: In Pursuit of Financial Freedom" which has sold over 20.000 copies, worldwide & a contributor to "International Book Writers" Best selling Growth Hacking 2". He has trained 10.000+ digital marketing professionals to date and has held digital marketing workshops around the world. His main goal is to help people build businesses through digitization, making them realize that dreams will come true if you stay passionate. View portfolio ( jitendra.co). Find him at LinkedIn, Twitter, & Facebook.

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