Online marketing has brought a whole new spectrum of ideas on how you can start a business with very little capital. This is revolutionary because lack of money happens to be one of the biggest impediments towards implementing business ideas.
If you are told you that you could start a business today on your laptop or desktop provided you have an internet connection, you probably would not believe it. But technically they would be telling you the truth. The technologies available to us today allow for such a feat to be possible.
Here’s how drop shipping enables you to start a business with little to no capital
You probably have come across the term drop shipping; this term is associated with online stores and shipping. Drop shipping is what makes it possible for an entrepreneur to start an online store and not have to maintain a large inventory of products or be concerned about customer deliveries. You do not need to have a physical inventory at all or be a manufacturer.
This is made possible by working with a company that specializes in drop shipping, usually a wholesaler or a manufacturer.
How it works:
- You would need to have a credible website or online store on a platform such as Shopify, Amazon, eBay or Etsy
- The next part involves listing your products on your online store
- When a customer buys from your online platform, you then buy the product from the drop shipper usually a wholesaler or manufacture at a lower price, and they would be responsible for the shipping to the customers’ address. You keep the difference between the selling price to your customer and the cost price from your drop shipper.
The advantages of drop shipping to small business owners are not having to maintain a physical inventory, which means lower overhead charges as renting a warehouse is not necessary. It also means you require very little capital since you do not have to purchase inventory up front.
The downside to this model, however, is should the shipping be delayed you take the blame. Your profit margins also tend to be smaller. But if you are starting with no capital at all, this is a great option.
Drop shipping is a marvel of online business because it helps parent brands sell more and empowers small business owners to get in on the act by selling from drop shippers. The result is the store makes a profit without the need of pouring capital into inventory.