What are eCommerce and Dropshipping?

8 months ago   •   .11 min read

.By Gouri Choubey
.Table of contents

The eCommerce industry has come a long way - its growth has offered remarkable opportunities for businesses to thrive and build profits. One avenue that has been making waves in the digital marketplace is dropshipping—a business model that offers flexibility, cost-effectiveness, and global reach.

Imagine running an online business without the headaches of managing inventory, packaging, and shipping. By partnering with a third-party dropshipper, you can leave the fulfilment tasks in their capable hands while you focus on growing your business and delighting customers.

There's a lot more than this - and we'll be discussing everything eCommerce and dropshipping, shedding light on what exactly it is, its benefits and how you can set up such a business. So, whether you're a seasoned entrepreneur looking to expand your online presence or a budding business owner eager to explore new horizons, this guide will help you seek the knowledge and tools necessary to navigate the vast landscape of online retail.

What is eCommerce?

Now before we get started, you may want to know what eCommerce business is exactly.

In a nutshell, eCommerce is all about buying and selling products/services over the internet.

It is like having a virtual market where you can showcase your products to attract customers from far and wide. Here, there's a wide range of online transactions, from online retail stores to business-to-business transactions - plus everything in between! The power of eCommerce is that one can break down all the geographical barriers and provide convenience to your customers - all while sitting at your home!

Picture this, you are a fashioned-forward entrepreneur with a knack for unique clothing. In the traditional business market, you could only sell your products in a physical store - but with eCommerce, the horizon expands. You can meet your potential customers beyond your local area - including international markets.

Now when your business is online, your customers can find that perfect dress, add it easily to their virtual shopping carts and ease their way to secure checkout. And the payment options? They are quite convenient too - ranging from credit cards to digital wallets, eCommerce has got everything to make customers feel like shopping experts!

What about running an international business?

If you run an international business, your customers from different countries may be concerned about whether they can shop conveniently in their own currency. And that's where the currency-conversion feature steps in to save the day - a nifty tool that allows customers to view product prices and complete transactions in their preferred currency.

A lot of payment providers can help you out with this. Instead of seeing prices in the store's default currency, which might be unfamiliar or confusing to customers, they can switch to their local currency in just a few clicks. And at the same time, you receive the sales money in your local currency if you choose to.

Now, instead of managing physical inventory and logistics yourself, you can partner with a reliable fulfilment service. With dropshipping, for instance, the fulfilment partner will handle the packaging and shipping of the product directly to the customer's doorstep. This eliminates the need for you to store inventory, reducing costs and streamlining your operations.

eCommerce & Dropshipping: Thrive Online - Discover the power of e-commerce and dropshipping in this essential guide

Basics of Online Selling

Let's explore the fundamental steps to thrive in the digital marketplace.

  • Target audience: Who are your ideal customers? What are their needs, preferences, and demographics? By understanding your target audience, you can tailor your online selling strategies to effectively connect with and engage them.
  • Platform Matters: Pick platforms that give a user-friendly experience to you and your customers. Consider factors such as ease of use, customization options, payment gateways, and integration capabilities with other business tools - these things can make your work a breeze. Popular eCommerce platforms include Shopify, WooCommerce, and Magento.
  • Create an Engaging Online Store: Next up, your online store should be a magnet for potential customers. And so, design your store to be visually captivating and easy to use. Categorise your products with precision and don't forget those product descriptions - they have the potential to boost your sales! Add up high-quality product images and customer reviews for adding that boost the trust of your customers.
  • Optimise for Search Engines: You need to come up with search engine optimization (SEO). Why? Well, this is to ensure that your online store appears in the spotlight. Conduct keyword research on what your target audience is seeking when looking for products like yours. Then, leverage those keywords into your product titles, descriptions, and website content to boost your visibility on the internet.
  • Provide a Secure Checkout Process: It's important to have your checkout process secured to build the trust of customers. Shield your customers' sensitive data with SSL certificates and offer them secure payment gateways that make them feel safe while shopping. Clearly communicate your commitment to data protection and privacy policies.
  • Establish Reliable Shipping and Fulfilment: Efficient shipping and fulfilment are essential for customer satisfaction. Set clear shipping policies, provide accurate delivery estimates, and partner with reliable shipping carriers or fulfilment services to ensure timely and hassle-free order deliveries.
  • Implement Effective Marketing Strategies: Promote your online store through various marketing channels. Leverage social media platforms, email marketing, content marketing, and paid advertising to drive traffic to your store. Engage with your audience, run promotional campaigns, and leverage influencers or affiliates to expand your reach.
  • Analyse and Adapt: Regularly analyse your online selling performance through website analytics and sales reports. Identify trends, customer behaviours, and areas for improvement. Use these insights to optimise your marketing efforts, enhance the user experience, and refine your product offerings.

Benefits of eCommerce

Understanding the benefits of eCommerce is essential for staying competitive and maximising your growth potential. Let's delve into the remarkable advantages that eCommerce brings to your business.

  • Unlike a physical store, an online store can be accessed by customers from anywhere, anytime. By tapping into this vast market, you can dramatically expand your customer base and explore new opportunities for growth.
  • You also eliminate expenses associated with maintaining a physical storefront, such as rent, utilities, and staffing. Inventory management can also be streamlined through dropshipping, where products are shipped directly from suppliers, reducing the need for warehousing and inventory holding costs.
  • Customers can browse and purchase products at their own pace, from the comfort of their homes or on the go. Features like personalised recommendations, saved shopping carts, and easy checkout processes can deliver a seamless shopping experience that keeps customers coming back.
  • Unlike traditional retail stores with fixed operating hours, an online store is open 24/7. As a result, you can sell to customers in different time zones or outside of regular business hours, making sales even while you sleep. The accessibility of your online store ensures that potential customers never encounter a closed sign.
  • You get valuable data and insights into customer behaviour, preferences, and purchasing patterns. By leveraging analytics tools, you can gather information on website traffic, popular products, and customer demographics. This means more data-driven decisions, optimised marketing strategies, and personalised shopping experiences to better meet customer needs.
  • From social media advertising and email campaigns to content marketing and search engine optimization, you can use all the digital marketing strategies to reach your target audience without hefty advertising budgets.
  • By providing excellent customer service, easy returns, and seamless communication channels, online offers can build trust, foster loyalty, and create brand advocates who will promote your business to others.

What is Dropshipping and How Does Dropshipping Work?

If you're exploring eCommerce as a small business owner, chances are you've come across the term "dropshipping." This innovative business model has gained immense popularity, revolutionising the way entrepreneurs operate their online stores.

Basically, it is a retail fulfilment method where the store owner does not keep products in stock, but the third-party supplier does. So, when a customer places an order, the store owner purchases the products from a third-party supplier who then directly ships the items to the customer. In essence, the business acts as the middleman between the customer and the supplier, without ever physically handling or storing the products. Quite convenient right?

But how exactly does dropshipping work? Let's uncover the process behind this efficient model in simple terms.

  • Begin by signing an agreement with a trusted dropshipper. The agreement outlines the terms, responsibilities, and services provided by the dropshipper.
  • Now when a customer purchases a product from your online store, you receive the order and payment details.
  • To confirm, you send the customer an order confirmation, acknowledging their purchase and providing necessary details such as order number, shipping address, and expected delivery time.
  • Once you have the customer's order, you forward the details to the dropshipper. This typically involves sharing the product SKU, quantity, customer information, and shipping address.
  • Now, the dropshipper takes care of the product packaging, labelling, and shipping process. They use their own inventory and shipping resources to fulfil the order.
  • You can provide updates on order processing, shipping tracking numbers, and any other relevant information to keep them informed.
  • The dropshipper ships the product directly to the customer's designated address.
  • Finally, the customer receives the product at their doorstep. It's crucial to ensure a seamless and satisfactory delivery experience to foster customer satisfaction.
  • In the event of customer queries or potential returns, you act as the primary point of contact. You liaise with the dropshipper to resolve any issues and ensure customer satisfaction.
While this outlines the general flow of dropshipping, it's important to note that the specific process may vary based on your agreement with the dropshipper. Some dropshippers provide additional services such as inventory management, automated order processing, or personalised packaging.

Advantages and disadvantages of dropshipping

Here are some things you can enjoy with Dropshipping:

  1. Low Startup Costs: Dropshipping eliminates the need for upfront inventory investment, allowing you to start a business with minimal financial risk.
  2. Easy to Get Started: Setting up a dropshipping business is relatively simple compared to traditional retail. You can quickly launch an online store and start selling products without the hassle of inventory management.
  3. Wide Product Selection: With dropshipping, you have access to a vast range of products from multiple suppliers. You can offer a diverse product catalogue to cater to different customer preferences and explore various niche markets.
  4. Flexible Location: Since you don't need to handle physical inventory, dropshipping gives you the flexibility to operate your business from anywhere. As long as you have an internet connection, you can manage your store and fulfil orders.
  5. Scalability: Dropshipping allows you to scale your business easily. As your sales increase, you can expand your product offerings without worrying about storage space or fulfilment logistics.
  6. Reduced Operational Burden: With dropshipping, you don't have to worry about inventory management, packaging, or shipping. The suppliers handle these tasks, freeing up your time to focus on marketing, customer service, and growing your business.

Here are some problems you might face with Dropshipping:

  1. Lower Profit Margins: Since you're not purchasing products in bulk, the profit margins in dropshipping can be lower compared to traditional retail. The costs of goods sold (COGS) can be higher due to the individual product pricing from suppliers.
  2. Less Control over Product Quality and Inventory: When relying on suppliers for product fulfilment, you have limited control over product quality and availability. If a supplier runs out of stock or delivers poor-quality items, it reflects on your business and customer satisfaction.
  3. Inventory and Supplier Management Challenges: Coordinating with multiple suppliers can be complex, especially when dealing with inventory discrepancies, delayed shipments, or out-of-stock items. It requires careful management and communication to maintain a smooth operation.
  4. Intense Competition: Dropshipping has low entry barriers, resulting in high competition among sellers. It can be challenging to differentiate your store and attract customers in saturated markets.
  5. Dependency on Suppliers: Your business success depends on the reliability and efficiency of your suppliers. If a supplier fails to fulfil orders promptly or provides subpar service, it can impact your reputation and customer satisfaction.
  6. Limited Customization and Branding: Since you're selling products from suppliers, customization options may be limited. You have less control over product packaging, branding, and the overall customer experience, making it harder to establish a unique brand identity.
eCommerce & Dropshipping: The Ultimate Guide - Your roadmap to online prosperity, providing actionable strategies and tips for mastering e-commerce

Which Platform Is Best For Dropshipping In The UK?

If you're venturing into the world of dropshipping in the UK, you'll want to choose the best platform to set up shop. Lucky for you, there are some fantastic options tailored specifically for the UK market. You can consider eBay UK, Shopify UK, and Wix UK. These platforms are designed to provide top-notch services, enabling you to expand your reach and maximise your profits.

Shopify for E-Commerce: The Ultimate Guide to Boosting Your Online Sales
Our ultimate guide to Shopify covers everything you need to know to create a profitable online store. Learn more on wamo blog

Key Considerations to starting an eCommerce business

Market research to position business

Conducting some thorough market research to uncover the

  • interests of your target audience
  • analyse the competition
  • and gauge the demand for your products or services.

Have a Business Plan

Every business needs a comprehensive plan in place, and so do you! Create a business plan that

  • outlines your goals
  • target market
  • marketing strategies
  • financial projections
  • and all the nitty-gritty operational details.

Here’s how you can create a business plan

What are your products?

Choosing the right products is like assembling a perfect virtual team for yourself. Look for products that have that "wow" factor, profitability, and align with your expertise. Consider

  • sourcing options
  • pricing strategies
  • and the uniqueness or competitiveness of your offerings

eCommerce Platform

Look for features like easy

  • Product catalogue management
  • secure payment gateways
  • inventory tracking
  • and seamless order fulfilment integration

Website Design and User Experience

Your website is your digital storefront, so make it a place where customers can't resist shopping. Use some

  • captivating design
  • smooth navigation
  • speedy loading times
  • and a checkout process that's as easy as pie.

Secure Payment Systems

When it comes to payment systems, security is key.

  • Choose trusted payment gateways that protect customer information
  • Offer a range of payment options to cater to everyone's preferences.

Logistics and Order Fulfilment

The journey doesn't end at the checkout. You need a smooth and reliable order fulfilment process. Find shipping partners or fulfilment centres that

  • offer competitive rates
  • timely delivery
  • and a tracking system that's time efficient and accurate.

Customer Service and Support

We all know exceptional customer service is the secret to building long-lasting relationships.

  • Set up communication channels
  • Respond to inquiries fast
  • and offer hassle-free return and refund policies that leave customers relieved about their purchases

Understand and comply with relevant legal requirements for eCommerce, including

  • data protection
  • consumer rights
  • tax obligations, and intellectual property regulations.

Consult with legal professionals to ensure compliance and protect your business.

How can wamo Connect help you?

wamo Connect, is a platform that brings together entrepreneurs like you, fostering connections and creating valuable opportunities. With wamo, you can access exclusive promotions, discounts, and services from fellow wamo users and popular tools like Shopify, Canva, and Notion. Further, you can seamlessly connect with our support team to explore partnerships that suit your business needs best.

How to be a part of wamo Connect

Becoming a part of this dynamic and collaborative environment is as easy as filling out a form on our platform! Once you do, our dedicated team will jump into action, reaching out to you via email to dive deeper into your business and discuss all the exciting details. As a wamo customer, get ready to unlock a world of possibilities! You'll gain access to a vibrant network of like-minded entrepreneurs, and guess what? Exclusive offers that fit your unique needs will be at your fingertips.

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