Dropshipping is considered one of the best types of online businesses, and it plays a significant role in the world of e-commerce. This model allows you to create an online store and sell a variety of products without the need to invest in a large inventory. In simple terms, you act as the middleman between the buyer and the seller who offers their products through your online store.
.jpg "What is dropshipping")
Here's a quick overview of how to make a profit with dropshipping and everything you need to know to get started in this field. We will also cover the legal aspects and how to ensure that this type of business is permissible and acceptable according to Islamic Sharia principles.
This article on the "Investavault" blog will provide you with all the information you need to dive into the world of dropshipping and achieve impressive monthly profits. We hope you take the time to read this article thoroughly and follow the guidelines carefully to ensure that you run this type of business in a legal and ethical manner.
What is dropshipping?
The dropshipping model is characterized by not needing to have a physical store or inventory of products. Instead, it allows you to work with products from other suppliers. When a product is ordered from your online store, a third-party supplier purchases the product from the wholesale supplier and ships it directly to the buyer's address. How does this work?
In this model, there are three important individuals (A, B, C):
A - Wholesale Merchant: Displays their products in the online store on platforms like AliExpress.
B - Dropshipping Merchant: Displays the products of Merchant A in their online store with images and information without actually owning the goods.
C - Customer of Merchant B: Buys the product from Merchant B, and when the purchase is made, B buys the product from Merchant A and sends it directly to the address of Customer C.
This model is considered the sale of what the original seller does not possess, and in the legal and religious context, we find that this model enjoys legitimacy. The Prophet Muhammad, peace be upon him, mentioned in his hadith that it is not permissible to sell what you do not own. Therefore, it is necessary to learn how to practice this type of business in a legitimate and legal manner.
In the upcoming articles on the "InvestaVault" blog, we will explore all the different aspects of dropshipping and provide insights from scholars regarding the religious ruling on engaging in this field, as well as the legitimate ways to profit from it.
In summary: In dropshipping, the online store acts as an intermediary between the buyer and the original merchant who owns the product.
How to profit from dropshipping
In this topic, we will discuss the features, some drawbacks, and advantages that Dropshipping offers, and I will also share with you the requirements and equipment needed to profit from it.
Do You Need to Own an Online Store to Start Profiting from Dropshipping?
One of the key advantages that marketing teams love about Dropshipping is not needing to create your own online store. Thanks to this model, you can sell your products on various platforms such as eBay and even on social media channels like Facebook and Twitter, in the same way Dropshipping is used in e-commerce.
Additionally, you can showcase your products on various social platforms like Facebook, Twitter, and even on YouTube. However, it's important to note that this doesn't mean you don't need capital, but rather, it means you don't need to own an inventory of products and store them in your own warehouse.
Is dropshipping considered part of the commerce process or not?
In reality, Dropshipping on the surface is a part of the commerce process, involving buying and selling goods, targeting customers, executing advertising campaigns, and other trade-related activities. However, it's essential to note that the role played by Dropshipping is not fundamental to the commerce process.
Traditional commerce comprises three main pillars: the manufacturer producing the products, the wholesaler purchasing goods in bulk from the manufacturer and reselling them to other retailers, and the final retailer selling products to end consumers. This model also applies to e-commerce.
For Dropshipping, your role as an online store owner is that of an intermediary between the consumer and the original merchant or manufacturer of the products. Simply put, you facilitate the process of selling products and directing them to the end consumer, but you don't play a primary role in the production or wholesale purchasing of the products.
Does dropshipping require large capital?
Many beginners and newcomers to the world of Dropshipping often mistakenly believe that it doesn't require a large amount of capital. However, in reality, since this model relies on virtual transactions, capital is still necessary.
Why doesn't Dropshipping require a large capital? As a Dropshipping store owner, you'll purchase products from a wholesaler after you've received payments from customers in your store. This inherently allows you to start with limited capital.
However, there are a few points to consider:
- If you use PayPal to receive money from customers, there might be a delay in the beginning, up to 21 days, before you can access the funds. This means you may need to purchase the product directly from the seller using PayPal. Over time, with experience and trust-building, you'll be able to manage this issue better.
- You may need capital to set up an account on platforms like Shopify or any platform that offers a free online store initially. You'll also need to pay monthly fees to continue using these platforms.
- You might need capital to fund daily advertising campaigns for your products on online advertising platforms.
So, while Dropshipping can initially start with limited capital, it's important to consider potential expenses and plan your business effectively.
Disadvantages of drop shipping
Product Returns One of the prominent drawbacks of Dropshipping is the issue of product returns by buyers when they do not receive the desired items correctly. This can harm the business's reputation and require communication with the original seller on another platform. A solution to this problem can be good communication with the third-party seller before doing business, but occasional issues may still arise.
- Product Availability You may encounter a problem when someone purchases a product from your store, and you find that it's unavailable or that the product's price has unexpectedly increased, leading to a potential loss of reputation and potentially conflicting with religious principles.
- Order Management Delays in order processing, tracking product arrivals, and order fulfillment can occur. It's essential to carefully monitor these processes to avoid such issues.
- Incorrect Product Deliveries: Incorrect products may also be delivered to customers, necessitating error correction and the resending of the correct product.
- Customer Service Choosing reliable and certified suppliers is crucial to ensuring product quality and dealing with good customer service that provides appropriate guarantees. Poor customer service can lead to customer loss and financial losses.
- Shipping Delays Shipping delays can occur, leading to late product deliveries to customers and potential dissatisfaction.
- Incorrect Addresses Verification of the buyer's address to ensure its accuracy and to avoid shipping to incorrect addresses is necessary, as this can lead to problems and delivery delays.
These challenges highlight the importance of careful planning, communication, and selecting trustworthy partners in the Dropshipping business to mitigate potential issues and maintain a positive reputation.
Is it possible to rely on one source for products in dropshipping?
Diversifying your sources for purchasing products is one of the best strategies to adopt in the world of Dropshipping. It can increase product variety, expand sales opportunities, and ultimately boost profits.
However, there are some problems that can arise when relying on a single source, which should be avoided:
Choosing Reliable Sources Always choose reliable and trustworthy sources for purchasing products. Conduct thorough research and inquiries to verify the reputation of potential suppliers and sellers.
Carefully Select suppliers before entering into agreements with wholesale suppliers, investigate their backgrounds, assess their ratings, and understand the warranties they provide. This will help you avoid potential issues in the future.
Avoiding reliance on a single source can be a smart strategy in Dropshipping to reduce risks and enhance chances of success. Remember that diversity in suppliers and products can contribute to better success in this field.