Dropshipping in India: Risks and Benefits

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dropshipping in India

Our eCommerce industry is taking a modernized turn for every creative entrepreneur, known as the dropshipping. India is finally getting the hang of it and is effectively fragmenting their dropshipping businesses. Dropshipping in India is a unique technique where the seller does not need to deal with any of the inventories or manufacturing processes or the delivery of the orders that are placed.

Whenever an order is placed the seller just has to inform the manufacturer, then the manufacturer will take of the rest. After being notified, the manufacturer packs the order and delivers it to the concerned customer. The seller does not even see the orders physically. This is very relaxing for the seller as he does nothing and at the same time makes a business out of it. It is strange but dropshipping indeed takes away the maximum pressure from the seller and provides them with enough time to strategize for the marketing tactics for the business. 

However, dropshipping is a new concept that has been recently introduced to the Indian eCommerce and still has various aspects to it that has to be discovered and adopted. Dropshipping has its fair share in both its advantages and drawbacks. Let us discuss some major pointers of drop shipping.

How dropshipping functions? 

It is a process where the retailer sends the order details directly to the supplier company or the wholesaler, who then takes on the responsibility of packing and delivering the order to the concerned customer. The best thing about the dropshipping business is that the retailers don’t have to be concerned about keeping any inventory in stock. Moreover, the difference between the wholesale price and the retail price is the profit amount for the retailers. Nevertheless, in many instances, the retailers get a certain percentage of the profit of the sale which is paid directly by the wholesaler. 

While selling products online, the retailers provide a certain catalog or a website for their customers so that they can select products that are closely related according to their preferences. At times, the retailers provide the replica of the products to be sold to the customers, so that the customers can be confident that they are purchasing the right product. Sometimes the sellers prefer keeping their wholesale source a secret. Therefore, many times the retailers label their shipping methods as “blind shipping” or private shipping”. Let us discuss the steps that are followed while conducting dropshipping business operations:

  • First, the customers place the order: In this step, the customer first places the order through the official business website. The website here is the primary seller’s website. Therefore, you must have a suitable building in a business website where the customers can select their products and place an order accordingly.
  • Then the dropship suppliers are informed by the retailers: This is the next step after the order is placed. As soon as the order gets placed, the retailer sends the entire detail of the order to the supplier so that they can manufacture or prepare for the order. You can manually do this or you do it online.
  • Final stage: In this stage the supplier’s packs and delivers the orders to the concerned customer at their stated destination.

These simple steps are followed while conducting dropshipping businesses. It is not at all complicated if all the steps are streamlined properly and all the steps are framed in an organized way.

Dropshipping platforms

Dropshipping seems to be a very simple type of business. However, it is not that simple and easy the way the web sells it to be. Various technical issues hurdle upon as soon as you get started with the dropshipping business. The most major problem of all is the creation of a suitable dropshipping platform. It is imperative to estimate the worth of an eCommerce business by analyzing the number of its stores being used in the dropshipping platform. Besides, it can be quite difficult to choose and commerce platform to develop your platform. Another debate that is to be highlighted is self-hosting and hostel platforms.

The plethora of eCommerce markets platforms available in the market is Woo Commerce, Magneto, BigCommerce, Shopify, OpenCart, and many such others. The dropshipping market is very competitive, and that is why it is difficult to identify the unique selling points. It is always a good idea to first have a good look at your business, and then only decide for the platform that you are willing to choose and whether or not it is feasible for the customers. We can develop a dropshipping platform in the following ways:

  • First, we need to analyze the needs and preferences of the customers. This will help you to get a proper outline for choosing the best suitable platform for delivering according to the customer’s preferences.
  • The next step is to identify all the particular demographics such as gender type, education background, age group, income statuses, etc. This will help you to identify the type of customers you are targeting to sell your products.
  • Then choose a suitable eCommerce platform and start testing the platform workability. Then you are done! Now your website will be live and visible to your targeted customers.

Benefits of dropshipping

There is absolutely no concern for the inventories

When it comes to a regular retail store, a huge number of inventories have to be managed and stocked, to manufacture the end-products and items that are to be sold or delivered to customers. Dropshipping has provided great assistance to such headaches and pressures. When it is drop shipping, you do not have to concern yourself with the management of inventories. You do not have to worry about preparing products or administrations in bulk, and then worry about keeping it safe from damage. You don’t have to concern yourself with tracking your products which takes up huge resources and time. If you are using dropshipping, then you don’t have to concern yourself with products that are not being purchased as of now, instead, you can focus on expanding your business ventures. 

Lower budgets for your business

For any business in any part of the world, it requires a huge amount of capital and budget money which is required for manufacturing the products, preparing the products, managing inventories, maintenance of records, managing refunds, and returns, and lastly for the customer deliveries. Dropshipping has cut out the costs effectively. The seller doesn’t need to invest a single penny unless and until an order is placed and is being paid for by the particular customers. Thus, the risk of failure gets minimized significantly. Only a minimum amount is required for marketing processes and for paying taxes to the government of India.

More varieties and products

The eCommerce business that runs in India offers a range of varieties. Dropshipping has been introduced in India at its peak time where people are eager to explore newer products and items online. People are nowadays are eager to find a variety of items online that matches closely according to their tastes. as the dropshipping methodology provides benefits like zero boundaries on inventory management along with lower price setup, it has an added benefit that is the sellers being quite free from other concerns provides with many variations of a single product. Moreover, other products can also be added to the website without being concerned about the overhead costs. This enables you to have thousands of variations for a single product type. This is a great opportunity for some who wishes to be a creative and successful entrepreneur.  

The risk involved is very less

The online store of dropshipping has no extra events that are being featured in the background. Thus, there is no extra risk that is involved. The stock of inventory in a normal retail business keeps on pushing the seller on moving the inventories daily which otherwise can become worthless in no time. If this happens, then the whole stock has to be emptied. In that case, the seller will go through huge margins of losses, as all the money required for the stock would drain away. In the dropshipping the seller doesn’t have to buy the inventories; rather he pays only for a product when that particular product is being ordered from the online website. This is a much-secured system where the seller has no risk at all. Even when the seller is not able to sell his products, he doesn’t have to pay for any staff. The seller just has to pay for the inconvenient marketing he did. Therefore, dropshipping is a safe side for your business. 

Location independence

The dream of every entrepreneur is to be able to work from anywhere. Dropshipping gives that luxury to work from any place. In dropshipping, it does not matter where you are working from, as long as you have a good Wi-Fi connection. The sellers can travel with their laptops and build their eCommerce business on their way. The only thing that the seller has to take care that there is no broken communication with the customers, manufacturers, and suppliers. If he maintains the communication processes, the business can grow easily.

Risks of dropshipping

There is no control

In the dropshipping business, every important activity is looked after by a third party and not the seller himself. Therefore, the whole process is a game of unpredictability. The only thing you can do is trust them blindly but you cannot have access or control over any activity throughout the process. If anything goes wrong, the third party won’t be coming to the scene to handle anything that has gone wrong. Whatever may be the case, the seller will be liable to answer their customers, as the customers have directly placed the order from the business website. 

Lower profit margins

Setting up the whole dropshipping site is a low paid job. This aspect of the dropshipping business tempts the seller to agree to a lower profit margin for every order being placed. If the overall work is done is considered, then the maximum amount is being entitled to the supplier company. Now if the seller can convince his customers into buying the product at a better price, then profit margins can increase significantly. However, often sellers don’t take the marketing tactics seriously and try working their way out via a bad online presence. Therefore, the sellers have to compromise with lower margins of profits for the products being ordered. 

Demand management is unsteady

In the dropshipping business, the sellers are free of any extra responsibilities which also includes managing inventory. Therefore, the sellers can undergo huge losses due to the unavailability of a suitable number of products at the suppliers. Now, the number of orders cannot be predicted. If there were a sudden rise in the demand for a certain product, then sellers would not know if there is any shortage in the inventory stock and that it will take more time to be delivered. The third-party that is involved in maintaining all these activities is doing the same for many other sellers, so they can’t track these scarcities. Also, the suppliers are not always supporting enough to inform the sellers about these inventory gaps. It is one of the major challenges that the sellers face while doing dropshipping business. 

Lacks supplier’s management

When the sellers opt for multiple suppliers, the major problem arises during the shipping processes. The sellers have to deliver the items individually to the customers, even if the order was placed in bulk. Due to this situation, the customer will get the order separately and has to pay separate shipping charges for different packages. This is not fair form the customer’s perspective and this will just piss them off from your service. This problem can only be resolved if the sellers can keep all their suppliers synchronized, which practical not possible. Another way to resolve his problems is to identify a supplier who perfects for eCommerce dropshipping business alone. This will help in preventing any further confusion and the customers will receive their orders at a single time with a single shipping price being charged at their order.

The future of Dropshipping in India

There is a lot of scope of this business in India, especially for those entrepreneurs that are newer to the industry. It is the most cost-effective way to start an online business. As internet penetration has been a great success in India, so will be an online business. Nowadays customers prefer shopping online rather than facing the crowd in the retail store. Therefore, it is a great opportunity to build your online presence. Dropshipping is a type of business that is not entitled to many risks and challenges because here you invest in products only when an order is placed.

Therefore, when it comes to the future of the dropshipping business in India, there is immense scope for it. After the introduction and massive success of Jio internet, India has come to a lot closer to complete digitization, and thus drop shipping business is bound to be a massive hit in the coming years. With the increase and easy accessibility of smart devices, more and more people are getting inclined to using eCommerce platforms for purchasing items at the comfort of their homes. This rise is only going to go upwards, as high-speed internet services gain popularity. Moreover, starting a dropshipping business in a country like in India is very easy. India, with its growing population and advancement in technology, is a great place to start your online business. All you need to accumulate suitable vendors who are selling products of your interest. You can approach them directly for the logistics needs. 

In India, there are thousands of vendors are providing with such services, that will not find it difficult to find the suitable one for your business. It is recommended that if you are trying to sell products in India, you should get Indian vendors for the job rather than hiring someone from a different country. The Indian vendors can take of logistics management better if you are willing to do business in India, as they are more familiar with the lifestyles of the community. The scope of the dropshipping business in India is immense and it is only going to increase with each passing day.

Conclusion

Dropshipping is one of the best ways to do business in the eCommerce industry, especially if you are a newcomer in the business industry. The only thing that a person needs for this business is good knowledge about the advanced technology along with the risks that are associated with dropshipping businesses. The creative entrepreneurs that are new in the industry can try their luck in this business, but only if they are ready for the challenges that come along with it. The positive aspects of dropshipping can attract the entrepreneurs at first, but later they fail to run the business due to certain wrong assessments. All you need is a little knowledge and smart decisions for your business to grow and develop.

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