As e-commerce continues its upward trajectory, the drop shipping market is also burgeoning. According to a recent report by Globe Newswire, the Global Dropshipping Market size is projected to reach a staggering US$623 billion by 2028, growing at a market compound annual growth rate (CAGR) of 20.6% during the forecast period. This growth trend has had a ripple effect in the emerging economies, including Bangladesh, opening up a wealth of opportunities for entrepreneurs looking to make their mark in the e-commerce landscape. But what is drop shipping, and how can it fast-track your entry into the world of online business in Bangladesh?
Drop shipping is a retail fulfilment method that doesn't require an online store to maintain inventory. Instead, when a customer places an order, the retailer buys the product from a third-party supplier – be it a wholesaler or a manufacturer – and the supplier ships it directly to the customer.
This model allows e-commerce retailers in Bangladesh to run their businesses from the comfort of their homes with just a laptop. The retailer profits by selling the item at a price higher than its cost, typically determined through market surveys on popular e-commerce sites.
Pros and cons of drop shipping
Like any other business model, drop shipping has advantages and disadvantages.
Pros of drop shipping
- Only pay when you sell: The drop shipping business model is uniquely efficient because you only pay for a product after a customer has placed an order. This means you aren't left with the financial burden of holding onto unsold inventory. It's a way to mitigate risk, which is especially beneficial for new businesses trying to limit upfront costs.
- Flexible work schedule: Unlike traditional retail models, where constant inventory management, order fulfilment, and customer service may require a stringent schedule, drop shipping allows for more flexibility. As your suppliers handle these areas, you have the freedom to set your own hours and focus on growing and marketing your business.
- No need for a storefront: One of the substantial savings drop shipping offers is the elimination of a physical storefront. Without stocking and displaying inventory, you can avoid the hefty rental fees, utilities, and other expenses associated with maintaining a brick-and-mortar location. Your "storefront" is your online platform, which can be operated from anywhere at any time.
Cons of drop shipping
- Returns can get messy: The convenience of drop shipping has its complexities, particularly when it comes to product returns. As the retailer doesn't physically handle the products, navigating returns involves coordinating with the supplier, which can sometimes be tedious. The responsibility to ensure a smooth return and refund process ultimately falls on you, despite not having direct control over the products.
- Lower profit margins: While drop shipping can save on operational costs, it's also known for relatively lower profit margins. Since you're not buying in bulk or manufacturing your own products, your cost per unit might be higher. Combined with intense competition in the drop shipping market, this can lead to lower profitability unless you can differentiate your business or successfully target a niche market.
- No control over quality: As a drop shipper, you act as a middleman between the supplier and the customer. This means you're somewhat at the mercy of your suppliers regarding product quality. You have to rely on your suppliers to maintain the standards your customers expect, and any slip-ups can directly affect your brand's reputation, even though you have no direct control over it.
Navigating the world of drop shipping may seem complex at first, but understanding how to start to drop shipping effectively can make all the difference.
Fastest drop shipping methods
Identify successful drop shipping niches
Choosing a successful niche for your drop shipping business in Bangladesh is crucial. You'll need to consider the market, customer needs, and seller availability before starting a business in Bangladesh. Aim for a trending niche where you have expertise and supply is assured. This ensures that your customers receive their desired products quickly. Consider popular drop shipping products, such as gaming accessories, that can be shipped fast.
Identify proactive sellers on marketplaces
Proactive selling involves the seller taking control of the sales process by identifying customer needs in advance and marketing products accordingly. By partnering with proactive sellers on marketplaces, you can ensure minimal disruption to your drop shipping business in Bangladesh and provide top customer experience and satisfaction.
