How to Start Drop shipping Business in India | Amazon Business

What is dropshipping? Let’s say that you want to start your own online business, but you have no idea where to get started. You are not sure what products you want to sell, you don’t have money to invest, nor do you have room for inventory. Well, that is all that the dropshipping model is about.

Confused? Okay, we’ll explain. With dropshipping, you can sell products online without actually having the products with you.

Yes, you heard it right. All you need is to have a basic understanding of how to market and sell online. And of course, you need an online store to sell your products, and…yes, you need a computer!

This blog will walk you through how to build a dropshipping business in India; by building on what a dropshipping business is, how dropshipping works, what to ensure before starting your dropshipping business in India, the strengths and shortcomings of dropshipping business, and so on.

What is Dropshipping? What makes a Dropshipping Business Model?

Dropshipping represents a retail fulfillment technique enabling stores to sell the products to customers without actually owning them. Sounds interesting, right? Dropshipping helps run a business or store, saving you from the hassle of handling the products, having an inventory, and shipping it to the customer.

How does it work?

One of the most crucial elements of a dropshipping business model is the supplier. When a customer places an order, you buy the product from the supplier who dropships the package to the customer directly.  This image shows the main elements of a dropshipping business model.

The dropshipping business model enables you to promote your brand and business by identifying the right suppliers, retailers, or wholesalers for your dropshipping products.

How Does Dropshipping Business Work?

Whether you are in Europe or want to do dropshipping business in India, you need to find out what product you want to sell from a supplier. Next, list that product on your website at a price you set. So, when a customer places an order and pays for that product at a price set by you, you make a profit. How?

Because you will place the order with your supplier at their wholesale price and have it shipped directly to your customer, that’s how the dropshipping business in India and across the globe operates.

Let’s give you an example. Suppose, you have found a printer on a supplier’s website priced at INR 4800. You can then list that printer on your own website at INR 5500. So, when the order is placed on your website, you place your order with your supplier using your customer’s shipping details, earn the INR 700 profit and have the printer directly shipped to your customer. Simple, isn’t it?

Yes, we know what you’re thinking and it’s absolutely a valid point. Why wouldn’t the customer order the printer directly from the supplier’s website? Let’s learn why:

The Internet is Vast - So, customers might not know which supplier to buy from directly.

Product is not Everything - When people place orders for products, they are also looking at the brand, trust, lifestyle and marketing of those products. So, with the dropshipping model, you can focus on the marketing aspect and provide real value to your customers because you do not have to bother about warehousing or deal with the challenges that come with running an ecommerce business.

However, it does not mean that the dropshipping business model does not have any challenges. The biggest challenge for the dropshipping business in India or elsewhere is finding credible suppliers with good quality products. You need to research and spend a lot of time on finding and negotiating with suppliers whose products and on-time delivery can satisfy your customers. Also, since dropshipping is easy to start, there’s a lot of competition.

Things to know before starting a Dropshipping Business

Before starting a dropshipping business in India or elsewhere, you need proper planning, thorough research, and some starting capital. Here are some things to keep in mind to smoothen your dropshipping business journey:

Pick the right niche

Having a clear understanding of your business niche would determine what comes next.  Pick a niche that resonates with your business goals and aspirations. A niche store proves beneficial over a general store as the former could help you build a customer base easily. The logic is simple, would you prefer to buy a shoe from Adidas, specializing in footwear, or a gas station?

Know which dropshipping products to avoid

Although dropshipping saves you from the hassle of storing and shipping. It’s essential to identify the right dropshipping products to ship. Choosing the wrong product could negatively impact your business and customers’ trust. Avoid going for copyrighted products, fragile, too heavy to ship, or technically complex for your customers.

Conduct in-depth research before settling on a supplier

Suppliers are very crucial for your dropshipping business as they ensure the delivery and packaging of the products. Therefore, thoroughly research to narrow down your ideal supplier. Emphasize on the quality of the products and service provided over the cost of suppliers. Settling for a cheaper supplier to save money may end up costing you more in future.

Realize the importance of google analytics tools

The google analytics tool is extremely handy to identify your niche, studying the trends, understanding consumer behavior and target audience, and selecting products to establish dropshipping business in India. You can learn more about how to use this tool here.

Decide your marketing strategy

Have a clear vision on how you will promote your dropshipping business. The money you spend on marketing depends on your marketing platforms, target audience and the kind of product you are selling. If you are running on a tight budget, you could opt for influencer marketing and affiliate marketing. Nevertheless, don’t fall into the pile of dropshippers who start selling and fail to build a loyal customer base without any marketing plan.

You have more competition that you think

Don’t underestimate the competition you will face while starting your dropshipping business in India. You may have many competitors selling the same products. Although your business can coexist with others if your dropshipping services or products stand out from your competitors.

Create a website and identify the online ecommerce platform

It isn’t easy to establish your dropshipping business in India without a website listing your products and an efficient e-commerce platform to sell them. E-commerce platforms like shopify, Amazon, Indiamart, or Baapstore could come to the aid of Indian dropshippers.

Steps on How to Start Dropshipping Business in India?

Here’s a quick stepwise guide listing how to start a dropshipping business in India:

Step 1- Identify your business niche

Step 2- Study your competitors and define what makes you different

Step 3- Choose your dropshipping products

Step 4- Find a reliable supplier with quality products

Step 5- Price your products

Step 6-  Set up your dropshipping store

Step 7- Create the website and pick a secure payment gateway

Step 8- Form a marketing plan to advertise your dropshipping business

Step 9- Choose the e-commerce platform

Step 10- Start selling!

Types of Dropshipping Business Model

A dropshipping business model has many manifestations. You could decide which model to adopt for your dropshipping business in India depending on your business venture:

Product reselling

Product reselling is the purest and most common form of dropshipping. In this model the dropshipper makes products from different suppliers available for customers under one roof. The key is to pitch the unique qualities of the products to attract customers. Product reselling could be your calling if you have good marketing skills. For example, selling products sufficing the needs of a work-from-home audience needs adequate marketing and product knowledge to underline their uniqueness and why customers should buy them.

Business extensions

The business extension model enables retailers or store owners to expand their business online. The retailers partner up with dropshipping companies who ship the products to the customers whenever the dropshipping site gets an order. Maintaining a good relationship between the dropshipper or dropshipping company and store is essential to execute this model.

Product creation

Product creation represents a dropshipping business model where different products are bundled up to form a single product. Suppose you want to sell a DIY crafts kit, this kit will include many items like craft papers, ribbons, decorative threads, coloring pens, tape, and other accessories. For example, this image shows a craft kit with twenty two items wrapped as one product.

The tricky part is finding the right supplier or suppliers for your products. The ideal scenario is finding a single supplier for all the products in your bundle; otherwise, different products may get shipped differently.

Print on demand

Print on demand involves dropshipping products with either name or text on them. One of the easiest dropshipping businesses in India to execute. A few of the popular products to avail print on demand service includes mugs, t-shirts, mobile covers, pens, and curtains. Here’s an example of Gifteeng selling customized couples t-shirts sold via Amazon.

Other Types of Dropshipping models

Here are some more dropshipping business models for you to decide on your dropshipping business venture in India.

Reverse Dropshipping

In reverse dropshipping, high-quality products are acquired from countries importing them to be sold within your country/ countries exporting them. The quality of the reverse dropshipped products is relatively better than ones available locally. For example, sourcing quality items from the US and selling them to wealthy people in India. Reverse dropshipping limits the competition and promotes testing new products in the market.

E-Commerce Dropshipping

This business model enables you to sell products without any inventory stock. In this case, the seller finds a manufacturing partner delivering the products directly to consumers,  placing orders through your website. Popular ecommerce platforms facilitating e-commerce dropshipping business in India include Amazon, Shopify, IndiaMart and Baapstore.

Branded Dropshipping

Branded dropshipping involves buying unbranded products from the supplier and reselling them under your brand name.  For Indian dropshippers wanting to popularize their brand name and product without an inventory, branded dropshipping is your answer. By designing a unique brand logo and packaging for the products dropshipped, you could expand your branded dropshipping business in India.

B2B Dropshipping

Unlike the other business models supporting B2C dropshipping, B2C dropshipping involves online transactions between two businesses. Here, dropshipping occurs between wholesalers and retailers or wholesalers and manufacturers. The purchasing process, the product’s quantity and buyer interaction are different in b2b dropshipping.

Given the transaction is between two businesses, the quantity of the product is massive compared to b2c dropshipping, intending to maintain a long-term relationship between the supplier and buyer. The purchasing process of products is complicated compared to b2c dropshipping, as the decision-makers from finance, operation, technical and business departments are involved.

Advantages and Disadvantages of Drop Shipping

It’s important to realize the advantages and disadvantages of dropshipping before establishing your dropshipping business in India.

The primary advantages of are:

• It is fast and easy to start and requires a very low investment cost.
• One does not necessarily need to have an established business entity.
• Worry-free about managing inventory, packing, shipping.
• Access to millions of products from suppliers.
• Setting your own profit margins- You are free to set your own profit margin. However, it shouldn’t be set so high, costing your customers.
• Easy to scale- Compared to the traditional business model where the labor force increases with the inventory and customer base. Dropshipping makes scaling up much easier by making necessary adjustments through the supplier.

However, the dropshipping business has the following disadvantages:

• Lower profit margins compared to other business
• You may face issues with inventory through your supplier. And there’s no control over inventory management.
• Shipping issues like process delay, product unavailability, wrong product shipped, billing issues, or wrong product quantity.
• Supplier issues include poor quality, damaged product, high cost, slow delivery, or unresponsive.
• Fierce competition
• Less control over customer experience

How to select a Drop Shipping Supplier?

Suppliers are central in operationalizing your dropshipping business in India. Narrowing down the right supplier with required quality products determines the future of your business.

Wondering how to select your dropshipping supplier? Here’s how:

Meticulous Research

Yes, in-depth research is your answer. Get out your laptop and do an exhaustive google search for your supplier. Your ideal supplier is someone with inventory stock of the required products,  good shipping and packaging service, and delivery speed.  Although it sounds easy, it may take you longer to pin down your supplier(s). Being patient and clever with keywords is of essence. Also, knowing to prioritize quality over your budget when it comes to your supplier.

Interact with the Supplier

Before deciding on a supplier, don’t shy away from talking to them. Interacting with the supplier would enable you to assess their approachability and service quality.  Ask relevant questions concerning their operation. Also, ask for contact details of other customers from the supplier to check the service quality credibility of the supplier.

Consider the qualitative aspects of the supplier as well. Because maintaining a good relationship with your supplier is vital for your dropshipping business in India or any part of the globe.

Check the Service Quality

The best way to check the service quality of the supplier is by ordering samples from them. If you can’t seem to decide between the supplier (i.e., two or three) you have narrowed down, order samples from each supplier to assess their quality and customer service for yourself. Make your final choice by considering parameters like the delivery speed, product’s quality, packaging, and response time by witnessing it firsthand.

Consider the Technical aspects of supplier

Some suppliers may use outdated technology for their operations and client service. Ensure your supplier’s website is easy to navigate including a descriptive online product catalog, order history and product customizable feature for online merchants. Although, in some cases, the supplier’s website may look outdated but the required features may be intact.

Supplier’s Return Policy

A vital point to consider for selecting your supplier. Have a clear understanding of the supplier’s return policy before selecting them. Check the number of steps and ease of the process of returning products individually or in bulk, whether any additional charges are involved, the timeline for return and other associated procedures.

Tips for a Drop Shipping Business

No matter how easy starting a dropshipping business in India may seem, many things may go wrong. We have some tips for you to ease the functioning of your dropshipping business:

Dealing with mistakes

Problems are inevitable in any business venture. You may face issues with the supplier, delivery, product, or inventory problems. No matter the source of the issue, when customers suffer, it’s best to own the mistake instead of transferring the blame. Try to compensate the customers by offering a discount on the next product, refunding the shipping charge, or replacing/upgrading the product.

Don’t rely on a single supplier

Regardless of how efficient or service-oriented your supplier is, it’s best to use multiple suppliers to mitigate the risk and dependency on a single supplier. Multiple suppliers could enhance order fulfillment frequency, minimize the probability of product unavailability, and increase inventory capacity. Also, pay extra attention to inventory management and product selection with multiple suppliers.

Ensure Customer Support

You may think you can single-handedly take care of customer emails, queries, returns, or requests. In reality, you will be overwhelmed when the emails, questions, and requests start pouring in. Based on your budget, hire personnel to manage customer interactions and service via phone, email, or chats. Providing exceptional customer service impacts your business and builds loyal customer relationships directly.

Draft a clear return policy

A well-written return policy is crucial for your dropshipping business. Being transparent about the return policy is the key. Mention the conditions, product exceptions, process, hidden charges, time window, and other parameters of returns. Try to make the return process easy for the customer, not discouraging them from placing orders.

Don’t overlook the significance of marketing

Devote more energy to marketing once you have the website up and running. Creating a customer pool without a thought-out marketing strategy is difficult. Enhance your website traffic with SEO, advertisement, and social media marketing. Facebook, Instagram, Youtube ads, influencer and affiliate marketing, could also promote your business on a budget.

Emphasize quality

Be it your website, supplier, product, and customer service, ensuring quality is extremely important for your dropshipping business in India. Create an efficient website SEO optimized website with high-quality product images/ videos and well-written product descriptions. Choose reliable suppliers with quality products and don’t compromise on customer satisfaction.

Monitor your competitors

The best way to pace up your drive for improvement is by monitoring your competitors. You can learn from their mistakes, smart ideas, and service implementation of your competition. Continuously evaluate and analyze the competitor’s website, product listing, and social media channels to improve and distinguish your approach.

The Supply Chain for Drop Shipping

The supply chain implies the product’s journey from inception to reaching customers. The supply chain for dropshipping could be as detailed and exhaustive, from procuring raw materials for the product to manufacturing and finding its way to customers. But most importantly, you need to know the significant players in this supply chain- manufacturers, wholesalers, and retailers.

Manufacturers create the products, but they don’t sell them to the consumers. Instead, they sell the products to wholesalers and retailers, as manufacturers sell them in bulk.

Wholesalers buy products in bulk from the manufacturers and sell them to retailers. The products bought from the wholesalers and sold to retailers to required customers.

Dropshipping can occur at any point in this supply chain if dropshipping services are provided by any party (i.e., manufacturer, wholesaler, or retailer). Product prices are lower if you purchase them directly from the manufacturer if you meet the buying conditions. However, it’s relatively easier to meet the buying conditions of wholesalers or retailers.

The seller remains worry-free in this supply chain as the dropshipping is determined by the supplier they pick. In some cases, the suppliers have external distributors or delivery partners.

How to find Profitable High Demand Dropshipping Products

Isn’t the best and most profitable dropshipping products the dream of any merchant? However, identifying the best dropshipping products is not easy. Many factors help you decide which products are best for your dropshipping business in India.

 Consider these factors to pin down the best dropshipping products:

• How marketable are the products?

The marketing potential of products helps to determine their reach and store promotion. Easily marketable products often drive more traffic to websites converting them to sales.

• Nature of products

The nature of the products you choose also determines their profitability. For instance, niche-oriented, hobby supportive, business products, products with additional accessories, repeatedly purchased products, and small products have different profit margins.  You could easily make profit with business products, as businesses order in bulk and sell products that are difficult to find locally.

• Pricing your products right

Ensure you price the products right. Consider the pre-sale service aspect before setting a price. If you price the products high, the chances of you offering pre-sale customer support may increase. Having said that, it doesn’t mean you underprice your products. Find the sweet spot between profitability and customer’s perspective.

• Assess which products are in demand

Analyze the trends and popular niches in the market to pick products satisfying them. Check social media, google search, and use google keywords to assess which products are in high demand. For instance, since the pandemic hit in 2019, the need to mask sanitizers and PPE kits went up.

• Take advantage of seasonal products

Selling seasonal products could help to boost your profit margin. For example, work-from-home products, winter/ summer products, festive products, and rain compliant products.

• Another way to identify the best products is through your competitors.

How Amazon Business can help in your Dropshipping Services

Amazon can aid your dropshipping business in India in the following ways:

• You could become a seller on Amazon and start selling your products. To become a seller on Amazon, create an account and get access to the Amazon Seller Central with a valid account number and GST/PAn information. For information on listing how to list products and expand your business on Amazon check out sell on Amazon.
• Amazon’s FBA service to support your dropshipping business in India. Amazon can expose your business to the global market by dropshipping Indian products globally. Amazon’s impeccable customer service, delivery speed, and packaging quality can enhance your dropshipping business in India and widen the scope.
  

Conclusion

We believe this blog helped enhance your understanding of starting a dropshipping business in India and the different dimensions associated with it. You can give light to your entrepreneurial drive by starting your dropshipping business in India and taking advantage of the opportunities around you.

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