Depending on your perspective, dropshipping is either a quick money-maker or a complete waste of time. In case you’re not familiar, dropshipping is when a business sells a product and then orders the product from a third-party supplier who ships it to their customer. Basically, it’s a business model that doesn’t require you to keep your own inventory.
People who are considering becoming dropshippers may have many questions about the ins and outs of this business model. If you are thinking about international dropshipping, there are even more factors to keep in mind, such as whether you will need a customs broker and how you will handle international shipments.
Is dropshipping worthwhile for your business? Should you expand to international dropshipping? Read on to find out.
The Pros and Cons of Dropshipping
People have mixed feelings about dropshipping. On the one hand, it could be a low-investment way to make a profit. On the other, it might make you increasingly frustrated to be so reliant on your suppliers.
Here’s a quick glance at the advantages and disadvantages of dropshipping.
- No inventory costs or warehouse storage costs
- Low risk and low investment when it comes to new products
- Work flexibility and no need for office space
- Ability to quickly start your business without much of the planning involved in stocking inventory
- Scalability due to not having to stock products
- Wide variety of products available
- Little control over your business
- Heavy reliance on suppliers and shipping companies
- Low-profit margins and a highly competitive space
- Inventory issues including the possibility of out-of-sync inventory data
- Complex shipping calculations
- Delayed communication as you are the middle man between the customer and the supplier
What’s the verdict? Experts recommend dropshipping as a method for e-commerce companies that already have an established online presence. Many successful businesses use it for market research on new products and for shipping heavy or fragile products that cost a lot to store and ship.
Does that mean you shouldn’t become a dropshipper if you don’t have any kind of online presence? Not necessarily. You may still be able to build a successful dropshipping business if you’re patient enough to work through the challenges.
Don’t miss our guide on how to start your own import-export business.
International Dropshipping 101
Once you decide to start dropshipping, you’ll be faced with another question. Should you expand to international shipments? While there are certainly complications in the international sphere, there is also the potential to gain more customers.
International dropshipping is when your supplier and your customer are in different countries. For that reason, it’s very limiting to stick to domestic dropshipping, especially since many suppliers tend not to be in countries with a high volume of customers.
For example, if you live in France and your customers are in France but your supplier is in India, you will be engaged in international dropshipping because the shipments are coming from your supplier in India directly to your customers in France.
Curious which countries are the best to ship from? Click here for a breakdown of shipping by continent.
There are several things you need to keep in mind as an international dropshipper.
Check the shipping carrier
As the buyer, you may think all of the shipping details should be your supplier’s responsibility. That mindset can cause numerous issues. It’s best for you to be on top of everything to make sure nothing goes wrong. It’s you who will have to handle customer complaints, after all.
That being said, it’s extremely important to choose a suitable shipping carrier. You will need one with tracking capabilities so you don’t lose any shipments. Make sure to pick a carrier that can reach all of the countries where you intend to market your products. It would be inconvenient to have to find a new carrier after a customer has already placed an order.
Your best bets are UPS, USPS, FedEx, Canada Post, Australia Post, DHL, and UK Royal Mail.
Shouldn’t insurance be the supplier’s responsibility? Think again. If the supplier doesn’t have adequate insurance, you may be the one to suffer for it. Overall, dropshipping has enough risks to warrant obtaining proper insurance coverage for your business.
You can find a plan that’s specific to dropshippers, called dropshipping insurance. Other options include general liability coverage, property insurance, cyber risk and privacy liability, and inland marine insurance. Any of these can be purchased from an insurance broker.
For more details on which international insurance to purchase for your business, read this.
Calculate delivery times
There’s nothing customers hate more than waiting for their packages to arrive after the specified delivery time. Properly calculating the delivery time can give your customers a reasonable expectation of when their goods will arrive.
Of course, delivery times vary by country. That’s why you’ll need to put extra effort into making sure your estimated delivery times are as accurate as possible. Consider doing a test run with your supplier to see whether they can deliver the product in the amount of time they promise.
Develop a relationship with your supplier
This is a key that can often be overlooked, and the reputations of many businesses have suffered for it. It’s important to build a relationship with your supplier so you can work together to overcome any issues. You are on the same team, after all.
Another tip is to request samples of the products in order to test out your supplier before you commit to them. That way, you can trust your supplier will deliver high-quality products when the time comes for your customers to order them.
Become familiar with customs regulations
Because international dropshipping is technically considered importing/exporting, you are responsible for following all of the applicable customs rules and regulations of all the countries you work with. That means reading up on all of the various policies and preparing the proper documentation and paying tariff payments.
If the idea of digging through mounds of regulations for each country you’re dropshipping to sounds overwhelming, it may be best to simply hire a customs broker. A customs broker will assist you in preparing all of the mandatory paperwork and tax payments. It’s much easier to make sure you don’t miss any of the details when you hire a customs broker.
BorderBuddy is the perfect customs broker for your dropshipping business. We’ll help you work out all of the customs details so your business can run smoothly. We offer solutions for businesses of all sizes, so give us a call today.