Understanding about Dropshipping
You may have heard of the term "Dropshipping" more frequently these years. Dropshipping started garnering more interest in Singapore since the end of 2019, based on Google searches (Google Trends). This is highly contributed by the thriving market of e-commerce, the ease and confidence of online shopping, and people are motivated to build a supplementary income with minimal risk.
So what is all the hype about? We have put together the important things you need to know about Dropshipping and also share what Wholesomeness can offer to you.
Below are the quick links to what we will be covering:
Dropshipping is an attractive e-commerce model, which involves low upfront investment and little technical expertise.
Based on a retail fulfilment method, the store doesn't hold or handle the inventory. As a dropshipper, when you sell a product on your online store, your supplier packs your goods, and ship them straight to your customers. You don't have to handle the product at all. Without the need to manage the shipping logistics, goods inventory, and warehouse costings, you are free to focus on building your store, grow your customer base and market your products.
As retail shifts online, it is now easier to connect with customers and suppliers. You don't necessarily need a high upfront investment for a brick-and-mortar store, renovation, and large inventory to venture into the market. Dropshipping model can help you build a side hustle to supplement your regular income, building your store gradually as your sales grow.
Dropshipping Business Model
In a typical dropshipping process, this is what happens:
Customer places an order
Dropshipper purchase item from wholesale supplier
Wholesale supplier ship order directly to customer
1. LOW CAPITAL
Traditionally, with a brick-and-mortar store, retailers are bound by significantly high upfront investment, before the business generates revenue. With dropshipping, you do not need a physical store or warehouse - thus no rental, no renovation, and no inventory cost.
The dropshipping model allows you to purchase a product only when there is an order placed and it has been paid by the customer.
2. LOW ENTRY BARRIER
Managing an e-commerce business is much easier without having to worry about handling physical products. Little technical expertise is required, and you can operate your business comfortably at home, with a laptop and some operational costs.
Although as your business grows, you may wish to invest more, such as marketing ads, setting up a website, or improving your product fulfillment. But it's still relatively cheaper than the traditional retail business model.
3. WIDE SELECTION
Considering that you do not pre-purchase any items in your store, there is a wide variety of products that you can offer to your potential customers. When there are new arrivals, you can list them in your store for sale at no additional cost. You can also easily update your product listing when you observe any uprising fashion trends in Singapore or simply remove non-moving products.
4. EASIER TESTING
It can be daunting for business owners to make an initial investment in products without any certainty about their sales. Dropshipping allows you to test your store product selection with minimal risk.
This early stage of testing allows you to monitor the Singapore e-commerce market, so that in your next stage, you may explore bringing in fast-selling goods to enjoy bulk purchase discounts and quicker fulfilment to your customers. Wholesomeness can help you explore that with our ready stocks option.
Jump to Ready stocks model to find out more.
5. PASSIVE INCOME
The beauty of passive income is that it can supplement your regular income with minimal effort. With dropshipping, it is feasible that you are working while an order is placed and you can fulfil it on your phone. Although it does require you to build your store and maintain monitoring, the relatively low risk is why dropshipping is still favourable among other investments or startups.
Challenges of Dropshipping in Singapore?
Dropshipping is indeed appealing to many with the benefits it brings, but before you head into it, let us discuss its disadvantages too to get a full picture.
The main challenge of doing dropshipping in Singapore is that majority of the wholesale suppliers are located overseas, largely in China. These suppliers only do dropship within China and do not handle direct dropshipping to Singapore addresses. While there may be some third-party agents based overseas, complicated shipping logistics can be deterring for potential dropshippers in Singapore.
1. SHIPPING COMPLEXITIES
When a customer placed an order for multiple items, all the different wholesale suppliers you reached out to will send out their respective items separately to the customer. This not only results in multiple shipping costs on your side but also may confuse your customers with multiple packages received days apart.
2. DELIVERY TIME
Overseas shipping also results in factoring longer shipping time for your orders to reach your customers. Doing dropshipping in Singapore generally need to take into account at least 1 week of shipping. Thus the estimated delivery time has to be communicated clearly to your customers to avoid unnecessary complaints. Do leave a day or two allowances in case of any unforeseen circumstances, like customs delay, slow shipment by your wholesales suppliers. .
3. LOW-PROFIT MARGINS
The low entry barrier similarly brings about a highly competitive market for dropshippers. Since there is little investment in the start-up phase, dropshippers can afford a low-profit margin in exchange for exposure and traffic to their store. The ease of online shopping also encourages customers to compare prices across platforms. Luckily, coupled with good products curation and marketing efforts, there are still a lot of potentials in the dropshipping industry.
4. LOW BRAND BUILDING
Unlike big brands and custom-made apparels, there is little control a dropshipper has over the products. Usually, the item is branded and designed by wholesale suppliers. Thus with the vast collection available in the market, you curate your store by identifying the suitable collections for your targeted market. You can differentiate your store with well-designed websites, marketing mechanics, and engagement with your customers which can also help build loyalty over time.
Why work with Wholesomeness?
There are a couple of pros & cons of doing dropshipping in Singapore. Amidst the challenges it may bring, Wholesomeness hope we can offer you solutions and provide a service that can be made easier for dropshippers.
Good Selection Of Products
Wholesomeness pre-source and liaise with all the wholesale suppliers. Sourcing those with good reviews, we then offer these products at an affordable price to you for selection. In this way, you do not need to search through different sources for your stocks.
Simplified Shipping Process
Instead of liaising with all different suppliers for a customer's order, you only have to coordinate with us. We ship with the economy of scale to forward the savings to you. You do not have to worry about the overseas logistics cost or currency conversion rates, but just pay us what is reflected on our website.
Free Packing Service
When we received the goods, we will repack the items based on your customer's order, print out your airway bill on a shipping label, arrange for delivery at no other additional costs. Your customer will receive it in a single package, either by standard delivery or tracked mail depending on your selection upon each checkout.
Wholesomeness offers an inventory model, by bringing in your stocks and storing them for you at a nominal fee. Save delivery time and get greater discounts!
Should I opt for the Inventory Model?
Small batch dropshipping is good for testing, but as your business grows, you may be looking at how to increase your profit margin and how to fulfil your customers faster to stay competitive. This is why Wholesomeness added an inventory model for dropshippers.
Increase Profit Margin
Dropshippers are unlikely to enjoy bulk discounts as each dropshipping order on our website is tagged to one customer's order, a single recipient address field with the choice of delivery method paid on checkout. Hence to enjoy greater discounts, you can purchase in bulk for those better selling products first and store them with us for packing.
Shorter Delivery Time
To stay competitive in the market, how fast you can fulfil your customer's order might be differentiating you apart from other overseas sellers. If you feel that a week plus of the delivery time for dropshipping is too long now, having ready stocks allows us to prepare your order and ship it the next day.
Nominal Storage Fee
For the inventory model, there will be a nominal storage fee charged in Inventory Units. 1 inventory unit allows you to store 1 piece of item for $0.05 per day. If you are keeping 50 pieces of stocks with us for a month, this will amount to $75. This is inclusive of the processing fee incurred. We will share some scenarios below for clarity.
Terms and conditions apply. Purchased Inventory Units (IU) are non-refundable in cash. An order for an inventory item with outstanding storage unpaid for shall only be released upon the payment of the unpaid used storage. Inventory items are allowed to be kept without paid Inventory Units for a maximum of 3 months, after which, these items shall be at the disposal of Wholesomeness.
Ready to start dropshipping with us?
Yeah! We know you are excited and all ready to start your own dropshipping business! Now that you have a good understanding of the dropshipping model and the services Wholesomeness offer, we are sharing a step-by-step walkthrough to guide you in making your first dropshipping order with us :)