Home / Business in China / Explore how dropshipping business model can save you from spending thousands of dollars on inventory investment.

Explore how dropshipping business model can save you from spending thousands of dollars on inventory investment.

 

One of the key benefits of using dropshipping sites is that you don’t pay for the product until the customer pays for it, making dropshipping an attractive option for people who don’t want to spend a lot on initial inventory or who don’t want to risk buying products that won’t sell. In addition to eliminating the need for the physical inventory storage, dropshipping can prevent logistical headaches. You don’t have to worry about overstock or shortages on your end.

 

Use B2B China Sourcing Platforms for your Dropshipping Business

When doing China sourcing, you need to have a clear idea about the production process, chain of products and the operating environment of the supplier you have chosen. The easiest and most cost-effective place to start a search for suppliers in China is on the Internet and B2B sourcing platforms like Alibaba, Global Sources, and Made-in-China.com. This approach is most beneficial, if you need labor-intensive services. You need to build long term business relationship with the Chinese sourcing agent and need to have a full-proof plan for the branding of your product in your home market.

 

Dropshipping pricing strategy

A dropshipping pricing strategy is the single most important thing. Before you even think about which dropshipping pricing strategy you want, you need to have a clear understanding of what industry you’re in and what you plan to sell. Different industries are sold in different ways. For example, electronics are sold at a higher volume but the margins are much lower, whereas for household decor products you can sell at a much lower volume, but the margins are higher.

 

Take a look at some of the best dropshipping pricing strategies:

  • Fixed Markup
  • Tiered Markup
  • MSRP (manufacturer suggested retail price)
  • Cost-based pricing
  • Competition-Based Pricing
  • Free Plus Shipping
  • Bundle Pricing

By having your products shipped directly from the supplier straight to your customer, you can save on shipping and warehousing costs, delivery time, and the hassle of managing your own inventory. Traditionally, merchants spend thousands of dollars on inventory investment. While average margins may be lower compared to other retail stores that stock their own inventory, there is no risk of a “bad buy” with dropship manufacturers. Rather than raising your inventory costs by packing your warehouse with an unpredictable product, test it out with a trial period using dropshipping. More than just discovering if it sells or not, you’ll also have a better estimate of how much it sells for, giving you a more accurate number of what quantity to buy for your initial stock.

 

 

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