The standard scheme assumes that a businessman buys the necessary goods, stores them somewhere and simultaneously searches for buyers. As soon as those are found, he packs and ships the order and receives the money.

In dropshipping, everything happens differently. There are several participants in the scheme.

The supplier. This can be directly a manufacturer or a company that is also engaged in resale, for example, an importer or someone who buys goods from local production in bulk. He is responsible for the storage, packaging and shipping of the goods to the buyer.
Dropshipper. He is engaged in product promotion and customer search. More often, orders are accepted online through online stores, but no one forbids doing it offline. The latter may make sense when it comes to low-demand items. For example, an offline gardening store may have hoses and shovels in its assortment. And take orders for some complex drip irrigation systems. At the same time, the dropshipper does not store or process anything. He places an order, takes money from the buyer and sends it minus the commission to the supplier. It is also possible that the payment goes immediately to the supplier, who returns the commission to the dropshipper.

Buyer. Ideally, he does not see the difference whether he buys goods according to the standard scheme or by dropshipping. He may encounter problems if the supplier and the intermediary have not established a system of interaction. For example, we did not agree on how the product and money refund system works, and so on.

What are the pros and cons of dropshipping for a dropshipper

Among the advantages, the following can be noted.

It's cheaper to start. There is no need to spend money on the purchase of goods, look for a warehouse and think over logistics. This does not mean that you will not have to invest at all. To make and maintain a website, to organize promotion on different sites — all this requires both strength and money. But it will have to be done anyway. So compared to the standard business scheme it will be cheaper to start.
You can try to sell different things. When you first need to buy a product, you have to think three times before adding something new or non-standard to the assortment. Because there is a possibility that it will gather dust in the warehouse. With dropshipping it is easier and cheaper to test new product groups.
It's easier to follow trends. Let's remember the beginning of the pandemic. The business that turned its attention to masks was in the ladies. But to start selling them, some work had to be done. Find a supplier, negotiate with him, deliver boxes of masks to your warehouse, accept, place, bring new goods to the sites. Dropshippers can delete several items from this list and act faster.

But there are also disadvantages.

Inability to control processes. The supplier may delay the shipment of the goods, give the product away with a defect, not take care of the packaging, and so on. Of course, responsibility for such things can and should be prescribed in the contract. But this does not negate the fact that a lot of things happen outside the dropshipper's range.
Reputational risks. This point logically continues the previous one. The buyer does not care who is to blame for the problems. He communicates with the dropshipper and will blame him for everything. And also leave angry messages, write negative reviews, and so on.
High competition. If there are no agreements on exclusive terms, then one supplier may have many dropshippers. And therefore, you will have to fight for sales and commission from them.

What are the pros and cons of dropshipping for a supplier

Dropshipping allows you to delegate promotion and advertising to third-party companies. And if there are several dropshippers, this is a chance to present your product to a wider range of consumers.

The disadvantages are more difficult, because they can be specific. Let's say the importer sells the product through a dropshipper. The deals are going on, the buyers are happy. And then a person begins to sell fakes of this brand through his store and make a profit. The company is risking its reputation here.

How to become a dropshipper

Many of these points should be performed not sequentially, but in parallel, as they define your concept of action as a whole.

Select a product

The approach may be different, but the sales strategies will also vary.

So, you can work with everyday goods — conventional detergent or pasta. These are constantly running out, and they are being bought all the time. But there will be high competition in this niche: you are opposed by a stall on the corner, large retail chains, and many online stores. This means that you will have to pay great attention to the reasons why customers should choose you.

You can find a little-occupied niche and try to act in it. But it is worth remembering that low competition is often where demand is not very high.

In general, you need to study the market properly, research the audience in order to understand well what people are taking, why and how to motivate them to take the product from you.

Ideally, the product should have the following characteristics:

To be in demand all year round, so as not to depend on seasonal demand.
To be adapted for transportation is durable, so that it reaches the buyer in one piece, and of reasonable dimensions, so that delivery is inexpensive.
Do not require a fitting to reduce the risk of a refund.

But this does not mean that nothing else can be sold. Maybe you can masterfully switch from Christmas trees to products with hearts, and then to sets by March 8 and live happily all year round.

Decide on the site

A dropshipper can work on several sites at once or focus on one. It can be your own website, marketplace, social networks, anything. But it is important to study the options well and determine exactly.

The fact is that different products are sold differently depending on the platform. For example, social networks are more often suitable for clothes, jewelry, and so on. And it will be more difficult to sell bags of cement like this, for example. The marketplace is also not the most obvious place to sell concrete rings. Everything goes through their own websites there.

Find a supplier

There are resources that collect suppliers for dropshippers. For example:

"Optolider" — various goods from China.
Markethot — household goods, cosmetics, gadgets and more.
AlterModa — women's clothing.

But it's worth considering that easy solutions may not be the most suitable. Because the easier it is to conclude a contract with a supplier, the more competitors you will have attracted by the same advantage.

Another point: the shorter the chain from the manufacturer to you, the easier it will be to earn on the product, since each intermediary will increase the price by its commission.

Register a business

The self-employed cannot resell goods. Therefore, you will need to obtain the status of an individual entrepreneur or register an LLC. We have already written how to do this: for sole proprietors, for LLC.

Sign a contract

At this stage, it is better not to save money and use the services of a lawyer. Otherwise, you can ignore some small thing and, for example, get a fine.

Companies that work with dropshippers often offer their own version of the document. But it will also be useful to read it with a specialist so that he clarifies the controversial points.

Think over a product promotion strategy

This is a job that you will have to do all the time: test hypotheses, look for new channels of information dissemination, and so on. But it's good to start thinking about what you will enter the market with in advance.