Everything you need to know about dropshipping: definition, concept, advantages, disadvantages, how to do dropshipping, how to find the best French and foreign suppliers, tips to have a profitable dropshipping... etc.
You have heard about dropshipping and you want to start this adventure that can allow you to make ends meet and/or create your own business (you will then be your only boss!)?
Before launching yourself, you want to know everything about this method of marketing on the Internet? Its advantages? Its disadvantages? You may also want to know more concrete information: how to do dropshipping? How to create a cheap dropshipping website? How to find dropshipping suppliers in France or abroad? Are you also looking for an example of a dropshipping site that really works? Are you wondering who pays VAT in dropshipping?
I've been helping e-merchants set up and develop their online store for several years now. Some sell dropshipping, others buy and sell a stock of products... etc.
Today, I decided to create a complete guide to introduce you to this very popular marketing method for individuals. If you want to know everything about dropshipping in 2021, I think this guide will give you a big part of the answers to the questions you are currently asking.
This article is VERY long (5000 words) so click below on the section that interests you if you need an answer to a specific question. What you will find in this guide:
Definition of dropshipping
Advantages and disadvantages of dropshipping
How to create a dropshipping site
How to find suppliers
How to start dropshipping
Example of a successful dropshipping site
Tips and tricks to succeed.
First of all, I will give you a definition of dropshipping and present the concept. Then, I will give you the main advantages and disadvantages of dropshipping whether you are on the merchant or the supplier side.
I will also give you several tips on how to use it wisely on your e-commerce site. For example, I will give you many tips to find reliable dropshipping suppliers. I will also present you the 2 most used solutions in France to create a dropshipping website.
If, at the end of this article, you still have questions about dropshipping, don't hesitate to ask them in the comments section, I will try to answer them as soon as possible!
Go to a part of the article
What is dropshipping in 2021?
Definition of dropshipping
Dropshipping, a system used by the biggest e-commerce sites
What are the advantages and disadvantages of dropshipping?
What are the advantages of dropshipping?
What are the disadvantages of dropshipping?
How to create a dropshipping website?
The most popular SAAS solutions
The example of the French solution Dropizi
My advice: from renting to buying a website
Other advice: give yourself time!
How to succeed in dropshipping? The example of a successful store!
How to find dropshipping suppliers?
Free or paid dropshipping websites
How to find the best dropshipping supplier?
How to find a dropshipping supplier in USA?
How does dropshipping work? The keys to success!
Avoid putting all your eggs in one basket
Work in collaboration with the supplier
Create and write ALL the product sheets
Who pays VAT in dropshipping?
Dropshipping notice 2021: opportunity or false good idea?
What is dropshipping in 2021?
Before giving you the advantages and disadvantages of dropshipping, I will quickly give you a definition and introduce the concept.
I will also show you that dropshipping is already used by the biggest e-commerce websites, and for several years now, without you really being aware of it.
Definition of dropshipping
The easiest way to give you a definition of dropshipping is to take the first sentence of the Wikipedia page dedicated to this sales system. From my point of view, this is the simplest and most understandable definition of what dropshipping is.
Drop shipping is a tripartite system where the customer (the consumer) places an order on the website of the distributor (the retailer), who then transmits the order to the supplier (the wholesaler), who ensures delivery and manages the inventory.
In addition to this definition of dropshipping, Wikipedia provides us with a small diagram that illustrates the concept very simply:
definition-dropshipping-how-it-works
Dropshipping, a system used by the biggest e-commerce sites
By analyzing the definition of dropshipping that is delivered by Wikipedia, it appears that both parties focus on what they know best:
The e-merchant is in charge of generating sales: he then specializes in his core business which is the distribution of products
The supplier or also dropshipping wholesaler, who takes care of the production and shipping of the products sold by the distributor: he also specializes in his core business, namely production and logistics.
Dropshipping, a popular system on marketplaces
After reading this definition of dropshipping, it appears that this system has been used for many years by most of the major marketplaces such as Amazon, Ebay, Priceminister, Rueducommerce...
Indeed, all of these sites offer brands/companies/producers to sell their products on their sites in exchange for a commission on the sales made.
For example, on Rueducommerce, if you buy a product from the marketplace, it is not Rueducommerce but the merchant who has put the product on sale that will send you the purchased product. This is typically dropshipping.
What are the advantages and disadvantages of dropshipping?
Now that you know a little more about the concept, I propose to give you all the advantages and disadvantages that can cause this marketing system.
So that you have all the arguments to convince your future suppliers, I will give you the advantages for the dropshipper but also for the supplier.
These advantages can help you to convince suppliers because you can give them the right arguments.
What are the advantages of dropshipping?
advantage-dropshipping-how-it-works
As I explained in the introduction, I will try to present you the main advantages of dropshipping for the wholesaler as well as for the merchant.
The advantages of dropshipping for the wholesaler / supplier
When we talk about the advantages of dropshipping, most of the sites that deal with this subject only present the advantages for the e-commerce sites. Very few of them present the advantages for the suppliers. I thought it would be interesting to look at the benefits that these actors could get from such a system.
According to me, the main advantage of dropshipping for the supplier is to avoid having to invest in a distribution site on the Internet.
Selling on the internet, an expertise difficult to master
Indeed, it is true that wanting to sell on the internet is attractive for all companies. It is a good way to recruit new customers and gain valuable margin points through direct distribution.
However, it is not because a producer has an e-commerce site that he will necessarily sell and for good reason, selling on the internet is a not so easy task that requires a significant expertise.
As a reminder, the FEVAD counted more than 200,000 merchant sites in France in the first quarter of 2019. And out of this mass of sites, 66% generated in 2014 less than 30,000€ in sales, or less than 3000€ per month. You will easily understand that it is not because we have an e-commerce site that we sell!
And this is the advantage of dropshipping for a supplier: he can concentrate on what he knows how to do, i.e. produce, and let the merchants take care of the distribution.
This is for example what many brands do on Amazon: Samsung for example sells its products via Amazon's marketplace but only produces and sends the products purchased via the American distribution giant.
The advantages of dropshipping for the e-commerce website
Dropshipping has several advantages that encourage many e-merchants to be interested in this way of working. According to me, there are two that stand out from the rest: the absence of risk related to the stock of products and the absence of logistics management.
The financial aspect, the most attractive advantage
This is surely the main advantage of dropshipping: as an e-merchant, if you use a dropshipping product catalog, you will be able to sell products on your site without having to bear the financial risk of stock.
Indeed, as we have seen in the presentation of the concept, the e-merchant sells products that he does not have in his stock. It is the dropshipping supplier who takes care of the production, the risk on the stock and who takes care of sending the sales made by the e-merchant's website.
Thus, it is possible to create an e-commerce site and to make its first sales without having to invest several thousands of euros in the purchase of a stock.
Logistics, a distant memory
The other advantage of dropshipping for a merchant is the absence of logistics. As I mentioned above, it is the supplier who takes care of sending the product that has been purchased by an Internet user.
And for the e-merchant, it is a real workload less. Logistics is a job and not everyone likes to pack and send packages.
By freeing himself from logistics, an e-merchant frees up time to concentrate on what he really knows how to do: distribute!
And this is a real advantage because to make sales on the Internet, it is necessary to have multiple expertises and to have the time to implement them: natural referencing, paid referencing, ergonomics, social networks... etc.
What are the disadvantages of dropshipping?
As life is not a long quiet river, it is necessary to specify that dropshipping also has disadvantages.
The disadvantages of dropshipping for wholesalers
Dropshipping can also have its share of disadvantages for a supplier. In my opinion, the most important one is related to the conditions imposed by the larger sites. The other disadvantage is related to the lack of control over the information that will circulate about the products sold.
The dependence on the conditions of the big merchant sites
The main disadvantage of dropshipping for a wholesaler is linked to the conditions that the main merchant sites can impose.
Indeed, we have seen above that, on the Internet, there are some big companies in the distribution business. Among them, the American giant Amazon. In France, the main e-commerce sites such as Cdiscount, Rueducommerce and consort all have very strict conditions for the sellers of their marketplaces.
It is on these sites that a dropshipping wholesaler will make the largest volumes of sales. It is therefore natural to want to integrate them. However, these registrations pose problems related to the conditions imposed by these large sites: commission rate, production of content for product sheets, specific rules for logistics... etc.
As you can see, integrating a marketplace involves a set of specifications that can be complicated for the uninitiated. And if, with patience and competence, the wholesaler manages to meet the requirements of the various marketplaces, they will not hesitate to sweep away all this work if another wholesaler offers them similar products with a higher commission or even to source directly from its competitors.
For smaller e-commerce sites, the dropshipping wholesaler will easily impose its conditions. However, the sales volumes will surely be lower and the logistics problems will be multiplied by the number of distributors.
The lack of control of the product information
The other disadvantage of dropshipping for a wholesaler is the lack of control over the information that will circulate on the Internet. We will see later that for a merchant site to be able to position itself in the results of search engines, it will have to personalize all the presentation sheets of the products sold in dropshipping.
This implies a problem of the veracity of the information communicated by the reseller sites because we are then confronted with a basic problem of communication:
What the supplier has written to present his product is not always what the merchant will understand
What the merchant will write about a product does not necessarily correspond to reality.
By offering dropshipped products, a supplier loses control of the information that will be conveyed on the internet about his products. This can harm the products as well as the brand image of the supplier.
We will see later how to limit the risk linked to this loss of control of information.
The disadvantages for the merchant sites
On the agenda: the dependence to suppliers specialized in dropshipping, the similarity of the products with the competitors and the absence of control over the customer relationship.
Dependence on suppliers
The dependence on suppliers is one of the main disadvantages of dropshipping.
Indeed, as the e-merchant does not buy any stock of products, he is completely dependent on the strategy taken by the dropshipping wholesaler.
For example, the supplier can decide to stop producing an entire product category which would have a significant impact on the sales of an e-commerce site specialized on this category.
The dependence on the supplier is also linked to the price: the supplier is totally free to modify its selling prices without having to consult its network of distributors. And it is a whole business model which can change for an e-commerce site!
You will have understood, this dependence can be dangerous for the stability of an e-commerce site. We will see later on how to minimize this dependence and thus limit the risks linked to it.
Products similar to competitors
When you put on sale products from dropshipping suppliers' catalogs, you must be aware that there is a strong chance that your competitors will put them on sale as well.
This last sentence is especially true when you use suppliers who do not choose their distributors (they simply ask for a fee to access the catalog).
This means that you risk having a similar offer to your competitors and, as you do not manage the logistics, you have no differentiating factor towards your competitors. The only difference being related to price, you risk engaging in a pricing policy strategy that will make you lose more than it will make you gain.
We will see later how to limit this disadvantage of dropshipping, for example by going to negotiate directly with suppliers or by being smarter than your competitors.
The lack of control over the shipping of the product
The last disadvantage of dropshipping is related to the lack of control over the logistics of the product. You will have understood that what is an advantage can also be a big disadvantage for an e-commerce strategy.
Indeed, as it is the supplier who takes care of the production and the sending of the product. The e-merchant has no control: both on the quality of the product (does the product conform to the description that had been made in the flow of the supplier) that on the quality of service for the shipment of it (is the product well packaged, is it well highlighted ... etc.).
We will see later how to reduce the risk related to the lack of control over logistics.
How to create a dropshipping site?
There are many solutions to create a dropshipping site. The most appreciated by the e-merchants who use this marketing method are the SAAS solutions, that is to say solutions by monthly subscriptions.
The most popular SAAS solutions
The advantage of these solutions is that they allow access to a store with professional features without having to pay the few thousand euros that are normally required to have an e-commerce site at this level of performance.
To put it simply, these solutions have developed an e-commerce platform with standard features and they market it to all Internet users who want to open an online store. They usually charge a monthly subscription fee and a commission on sales.
The big advantage of these SAAS solutions (understand solution accessible from a web browser), is that they have developed the module that allows you to connect to recognized dropshipping suppliers.
Among them, there is of course the Chinese supplier of reference Aliexpress or the European supplier BigBuy. Thus, in just a few clicks, and without any technical knowledge, you can create your online store, import several hundred products and start selling on the internet.
To allow all Internet users to start, they offer you a turnkey dropshipping site which includes the domain name, hosting, site design and back-office features that will allow you to customize your store.
The two most used solutions in France today are Shopify and Dropizi
The example of the French solution Dropizi
For example, with the French solution Dropizi, it is possible to create a dropshipping site in a few minutes and without technical skills.
To start, you just need to register, select the name of your site and select one or more suppliers with whom they have a partnership and sell your products (Aliexpress and Bigbuy). The cost of this solution is 27€ per month for a one year commitment (or 324€/year), which is much more affordable than if you had to create a website from scratch. For example, a Prestashop website costs at least 1000€ if you want to have the minimal functionalities to have an efficient online store.
To help those who want to start a business and who have never done online sales before, Dropizi has set up 10 training modules offered to all those who open a store at home. Thus, you will be accompanied, step by step, in the creation of your first advertising campaigns on Facebook, in the referencing of your store in the Google results... etc. This free training is a real asset compared to Shopify, its Canadian competitor.
As it is a subscription-based solution, their goal is that you stay subscribed for the longest time with them. And the best way for you to stay with them is to make sales! That's why this dropshipping training is free: they have an interest in you selling as many products as possible.
My advice: from renting to buying a site
As I said, for 27€ per month, it is possible to have a professional store. This first store will not be totally personalized but will allow you to make your first sales and thus develop your turnover (and thus your income). It is a necessary first step for those who want to start with little means.
However, when your activity will grow and your turnover will develop, it will be necessary to invest part of your income in the creation of an e-commerce site with a solution such as Prestashop or Magento. Indeed, with a SAAS solution, you are not the owner of your site and you are therefore obliged to pay the monthly subscription as long as you use their solution.
Developing an e-commerce site with Prestashop costs at least 1000€. But once the site is launched, you will be the owner of your site, you will be able to customize it as you wish and you will not have to pay any subscription.
So, start with Dropizi or another solution such as Shopify and, once you will earn several thousands of euros per month of sales, invest in the development of a site that will belong to you.
Another advice: give yourself time!
In my opinion, you will need at least 3 months to realize if the work you are doing on your site can bear fruit.
Because, if it is possible to make your first sales thanks to advertising on Facebook for example, you will need a few weeks to understand how SEO works and its advantages (the training I mentioned above will give you all the techniques, don't panic ^^). Because it is thanks to SEO that you will be able to stop investing every day in advertising: you will make sales without investing anything!
Don't give up if you haven't made your first sale from Google after two weeks of using your site: if it was that easy to make sales, everyone would start. By the time your site is up and running, you'll need to invest a few dollars in advertising on Facebook or other social networks to make your first sales.
Take the time to train yourself little by little on how to bring people to your site, on the techniques to make them buy and especially to keep them loyal. And all this cannot be learned in 2 weeks.
The results will come but you will have to roll up your sleeves and be patient!
How to succeed in dropshipping? The example of a successful store!
There are many articles that argue against dropshipping saying that it is a scam that only aims to sell subscriptions to Internet users who want to create a business. Most say dropshipping is a scam!
And yet, I think that dropshipping is in fact like any other business creation: there are those who will succeed because they will have been clever and will have given themselves the means to succeed; and then there are those who will start but at the slightest difficulty, they will give up or abandon their store.
To prove to you that dropshipping works and that it is possible to earn a salary from it, I am going to present you an online store that is successful because it has the perfect communication axis. This store is specialized in the sale of watches.
Its marketing technique is infallible: it offers its watches for free to the Internet users and only makes them pay the shipping costs, as you can see in their sponsored communication on Facebook:
To keep its anonymity, I will keep the name of the site for myself. Why? Because to succeed in dropshipping, you have to live hidden! Indeed, if Internet users learn that your store is successful by selling dozens and dozens of products, what do you think they will do? Copy you! And so they will steal your customers.
You will say to me, how is it possible? How can this site make money by offering watches? The answer is very very simple:
Here is a watch that is offered on the Paul Leroy website. As you can see, it is well offered and the Internet users have only to pay the shipping costs which are 9,95€.
On the other hand, this same watch is sold on Aliexpress at a price of... 1,59€, free shipping! As you can see, every time a watch is sold on this site, the owner of this dropshipping store earns 8,36€!
9,95€ - 1,59€ = 8,36€ profit per sale! (you have to take out the payment fees which are a few cents, as well as the platform's commission which is 2%). The site makes a margin rate of 1329.24%. In only three sales, he repays his subscription on Dropizi... You still think dropshipping doesn't work?
Dropshipping is like any business creation, you have to be smart and persistent to succeed.
As you can see from the Facebook post, the fact that the watch is free attracts a lot of potential customers for this site. And even if there is a 2-3 week delivery time, people will be willing to wait because they think they are getting a free watch! By adding a notion of urgency "Hurry up: only 15 in stock", the results are guaranteed!
And it works! This user simply opened a store on Dropizi and selected some beautiful watches. He then created a great Facebook campaign with an unstoppable argument (free!) and he surely sells hundreds of watches per day.
How to find dropshipping suppliers?
If you don't use a SAAS solution like the ones I mentioned above, you will have to find suppliers to work with and sell your products.
Finding wholesalers who practice dropshipping can be a time consuming task. However, I would advise you to follow these tips if you are looking to find the best dropshipping suppliers.
This will prevent you from unpleasant surprises and especially from degrading the image of your e-commerce site to your customers.
Free or paid dropshipping wholesale websites
There are many sites on the internet that list the main dropshipping wholesale sites. Some platforms are free. Others are paid.
If you want my advice, run away from platforms that promise you product feeds for a monthly fee. Why? You'll agree that it's hard to imagine that a dropshipping wholesaler who wants to increase his sales would charge his potential resellers just to access his product listings.
As for free dropshipping supplier sites, don't stop at the results on the first page of Google: the best wholesalers are generally very bad in natural referencing. Those present on the first page of Google are not always more qualitative.
Do not hesitate to type the name of the supplier in Google to read the reviews of this one. You will see that for most of them, it is not always very glorious.
How to find the best dropshipping supplier?
To find the best dropshipping wholesaler, whether it is in France, Canada or anywhere else in the world, find out about the main producers of the products you want to sell and contact them directly to ask them if they practice dropshipping.
This step is time consuming but will allow you to find the best dropshipping suppliers. Your future business is at stake so take the time you need to find your suppliers. Don't jump on the first sites you find on Google: they are overused by other merchants and usually have a bad reputation.
How to find a dropshipping supplier in France?
This is a question that many e-merchants ask themselves: how to find a dropshipping supplier in France?
Contact directly the small producers
Moreover, to find the best French dropshipping suppliers, the easiest solution is to find and select small e-commerce websites, which sell atypical products or on your theme, and to contact them to propose a dropshipping partnership.
In order for a French supplier to accept to set up such a partnership with your site, you will have to have good arguments. For that, I advise you to already have an offer on your site and to have made several (tens/hundreds/thousands of) sales. You will be more credible in the eyes of your future partners.
To make it simple, when a site like Rueducommerce sources merchants to integrate its dropshipping marketplace, French wholesalers are immediately more receptive because of the significant sales potential that this can bring. Therefore, be careful with your speech and your arguments so that the wholesaler understands immediately its advantage.
How does dropshipping work? The keys to success!
This section will only be dedicated to e-merchants who are looking for advice to set up an efficient dropshipping strategy. As I mentioned earlier in this article, it is necessary to pay attention to several points to avoid bad surprises.
Here are several tips to implement if you want to sell dropshipping products on your e-commerce site.
Avoid putting all your eggs in the same basket
I mentioned this problem in the disadvantages of dropshipping: the dependence on suppliers. As the French expression goes, avoid putting all your eggs in one basket!
To reduce the risk and your dependency on one supplier, I advise you to use several suppliers who practice dropshipping. This way, if one of your suppliers suddenly decides to change the rules of the game, your entire business will not be put at risk.
Work in collaboration with the supplier
Furthermore, I advise you to try, once you have started to make several sales for a supplier, to get in touch with him in order to start a real business relationship by multiplying the contacts.
By creating a real working relationship with your supplier you will have only advantages:
A personalization of your account
Feedback from the supplier on the products they sell the most: if they are not the same on your site, work on them!
Easier negotiation of margin increases
Anticipation of the supplier's future decisions regarding his production.
Create and write ALL the product sheets
This is surely the most important point of attention in the implementation of a dropshipping strategy: duplicate content.
Duplicate content, a risk for your entire site
It has been a secret for several years now that Google and other search engines hate duplicate content. Simply because it doesn't bring any added value to Internet users.
To put it simply, if you simply take the product flow of a dropshipping supplier and put it online on your site, you will never manage to position yourself in the first results of Google.
Worse, by adding massively product sheets containing content present on other sites on the web, you risk attracting the wrath of Google and consort! This could penalize your entire site.
The manual creation of the files, an obligation to succeed
In order to rank in Google results with a dropshipping product catalog, you will have to manually create all the product files.
This implies renaming all the visual products before putting them online and writing all the product presentations: this writing effort is a very time-consuming operation but is necessary for the SEO success of your e-commerce site.
Who pays VAT in dropshipping?
This is a very good question but the answer is quite simple. It depends on the legal status you have chosen to create your company.
If you are a self-employed business
If you are in auto-entreprise, you will be exempt from VAT as long as you do not exceed the ceiling defined each year by the State. In this case, in 2019, the ceiling was 82800€.
Thus, you don't have to charge VAT to your customer and you don't have to collect it and pay it back to the State.
It is only when you exceed the legal limit that you have to collect, declare and pay it. The good news is that 82800€ per year corresponds to 6900€ of monthly turnover. So you have a little time before you have to worry about paying the VAT.
If you have a SARL, EURL, SASU or SAS status
If you are in another legal status than an auto-entreprise, you will logically have to collect the VAT on behalf of the State. Thus, if you sell a good with a 20% VAT rate, you will simply have to add 20% to the selling price at which you want to sell your products.
Each time you make a sale, you will have to keep this amount (it does not belong to you!) and you will have to make a monthly or bi-annual declaration to the State and then pay it back.
Concretely, if you plan to sell a product for 10€, you will have to sell it for 12€ in order to add the 2€ VAT that you have to collect for the State.
These 2€, you must put them on a dedicated account (it's the most secure to avoid that you spend it) and get closer to your accountant so that he gives you the necessary information for the declaration and the payment of the VAT.
Nothing very complicated, I assure you. It's just a matter of habit. And the advantage of collecting VAT is that you will also be able to deduct the VAT from the purchases you make for your company.
Dropshipping notice 2021: opportunity or false good idea?
According to me, dropshipping can be a real opportunity for a wholesaler or an e-commerce website as long as the strategy set up for the development of this new offer is well thought.
As we have seen, dropshipping has many advantages but also several disadvantages that can be important. So, before launching, it is necessary to think carefully about a strategy so that it is a real asset.
As an individual, if you want to start without having any experience in e-commerce, I advise you to follow the free training that I advised you above. This will allow you to acquire all the basics necessary for the success of your project.
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