The DropShipping principle is one of the great achievements in e-commerce of recent years. Hardly any other concept has so positively influenced the chances of young founders and budding entrepreneurs. However, it is often overlooked that drop shipping is merely the external framework of an entrepreneurial strategy. Without the combination with a promising business idea, i.e. the actual content of the respective company, the model remains ineffective.
The Business Idea as a Success Factor in DropShipping Trade
No company can be initiated without a brilliant business idea. Drop shipping companies are no exception. This form of trade, in which goods are sent directly from the manufacturer or wholesaler to the respective consumer, in principle only defines the relationship between the dealer, the supplier and the end customer. However, this does not mean which products are traded with, which target groups are the focus of the company and which strategic concepts a company uses.
However, it is precisely this that determines to a large extent whether a company can successfully assert itself in the market or whether it disappears from the public eye after only a short time. Drop-shipping concepts make the start into self-employment considerably easier, make special capital superfluous and keep costs and workload manageable in the long term. However, they do not relieve the founder of the trouble of thinking about a concrete business idea, which he then implements by drop shipping.
Business ideas on the basis of DropShipping
In this article we will introduce you to a total of 10 concepts individually and in detail and explain them using practical examples. Especially for prospective founders, who are still in the orientation phase at the moment, it is worth reading, because here ideas are initiated and deepened, which one would not come up with without further ado.
Recipe for success Abo-Commerce: DropShipping with subscriptions
When it comes to entrepreneurs, occasional buyers should become regular customers. Among all regular customers there is no more reliable type than the subscriber. This also applies to online trading.
In the newspaper and magazine industry, everyone knows what a subscription is. In this case, the customer decides to conclude a contract that automatically provides him with a regularly needed product, in this case the daily newspaper or a magazine. And while the customer enjoys a high degree of comfort thanks to this model, the supplier is pleased with a secure turnover and a high degree of planning security with regard to production and sales.
While the subscription model tried to spread more or less successfully in other industries, think of daily deliveries of milk or rolls, as they used to be known everywhere, the concept was only able to establish itself again successfully with the advent of online trading. For the online retailer, however, the model is really too tempting: he does not achieve a single turnover, but instead recurring income. He knows beforehand quite clearly what quantity of goods he needs and what amount of work is required. In other words, he enjoys a high degree of planning security. He can therefore negotiate good conditions and high discounts with his suppliers. After all, the affiliated manufacturers or wholesalers are also pleased with the regular sales. And last but not least, a comparatively small assortment is usually enough for the subscription dealer to inspire his customers.
The high level of security, the reduced effort and the close communication with the connected suppliers make the subscription model the ideal supplement for any drop shipping concept. The retailer offers his products in a comfortable and inexpensive subscription, while his supplier takes over the dispatch to the customers independently.
Success Story: Subscribing Socks
When entrepreneur Samy Liechti began offering his customers socks on a subscription basis in Switzerland in 1999, hardly anyone expected the resounding success of his company Blacksocks SA. Today, Liechti has long been regarded as a pioneer in subscription commerce and has long served many other founders and entrepreneurs as a role model for their own business models. Blacksocks SA is a great place to learn how to accurately track down products that are suitable for subscription.
Think Big – DropShipping portal instead of single shop
With some business models, it makes sense to design them a little larger from the outset. This is the case, for example, if you start an entire portal instead of a single online shop.
The basic principle of DropShipping is that a connected supplier sends the goods originating from him directly to the respective end customer, so that the actual shop operator has nothing to do with the processing of orders himself. In general, the distributor will only cooperate with one or a few manufacturers or wholesalers in order to offer its customers a well-structured and rather uniform product range. But it doesn’t have to be like this: it’s also possible to be one size bigger.
Instead of the individual shop, a complex portal can also be started in which the offers from numerous suppliers are combined. As with classic drop shipping, the dispatch of individual orders is of course also the responsibility of the supplier. The actual operator merely provides the platform on which the trade takes place. In this way, very extensive assortments are created. In order to ensure that these do not become too inscrutable for the customers and that targeted marketing can still be carried out, the delivery programmes of the portals are generally subordinated to a certain topic. Examples of this can be the trade with car accessories, fashion, sports articles or also with classical products from the B2B range.
Two aspects are particularly advantageous for the operator. On the one hand, the entire effort remains manageable due to the consistent use of drop shipping principles, even if the business volume develops very strongly. On the other hand, in the course of time and with increasing awareness of the portal, the suppliers approach the operator on their own to proactively offer their goods.
Success story: B2B portal with marketplace character
One example of the consistent implementation of the portal concept via drop shipping is the Mercateo marketplace, which specializes in trading products in which companies are interested. It is therefore a question of restricting it to the pure B2B area. Products are offered in the categories office supplies, construction and trade, factory and warehouse equipment, industrial supplies or hotel and gastronomy. Mercateo is extremely successful and for many companies the first choice when it comes to procurement.
Recipe for success niche trade – DropShipping in the niche
It is almost a truism: young Internet companies in particular are better off in interesting market niches than in mass markets. And this also applies to DropShipping dealers.
It is always a market niche when a high demand is combined with a low supply. In other words: If many consumers are interested in a certain product area, which has so far only been discovered and occupied by a few dealers, then niche markets emerge which offer many advantages for the operators of such offers.
The most important aspect is of course the significantly reduced competition and its many consequences: If you have few or no competitors, you will quickly reach a good position under specific search terms at Google & Co., you will not have to fight price wars with other companies and you will be especially appreciated by your potential customers because of the scarce offer. But the niche can do much more. Due to the supplier’s specialisation, his customers perceive him as particularly qualified and competent. This ensures increasing trust values and thus a good sales quota and high turnover. The delivery programs of such shop concepts can usually be kept quite small and manageable, so that the entrepreneur also saves a lot of time with regard to assortment maintenance.
Combining the advantageous niche trade with the DropShipping business model results in an overall concept with considerable potential. In addition to the good market and income conditions, the reduced amount of processing work and the many free resources for marketing and customer care are now added. All in all, this results in a very advantageous concept that is particularly suitable for founders and prospective entrepreneurs who are very familiar with a specific field and who are able to discover a suitable niche.
Success story: Market niche car accessories
There are many shops in Germany that deal with the topic of car accessories and that have to offer their customers thousands of products in order to have a small chance of success in this market. The leaf spring shop shows that things can be quite different and successfully covers an interesting niche segment in conjunction with a drop shipping strategy. Here, consumers discover a special range of parabolic and leaf springs for cars and trucks as well as related products and matching accessories.
Target Group Shopping Muffle – Curated Shopping per DropShipping
The e-commerce offers an ideal playground for first business attempts. But what do you do with target groups who simply don’t feel like shopping? Curated shopping provides the answer.
Every few years, a new business trend is emerging on the Internet that actually has what it takes to become a long-term success model. This is also the case with so-called “curated shopping”, which can be roughly translated as “assisted shopping”. Curated Shopping is especially aimed at target groups who have lost the desire to shop and for whom there is no worse idea than to spend hours in virtual or real shops. Of course, we are talking here about men, the classic shopping muffle.
Companies that offer curated shopping relieve their customers of the hassle of having to look at and select their own products. Instead, they compile a selection of articles based on a detailed profile of the respective buyer, which are tailored to the taste and needs of the customer. The selection will then be sent and the customer has the opportunity to check the goods at home. After all, he will only keep those products that he likes well. He just sends the rest back. Of course, the transmission of suggestions, as with a subscription model, takes place on a regular basis.
Whoever manages to combine this business model with the DropShipping principle has in some way discovered the philosopher’s stone of online commerce. He sells products to a target group that normally hardly buys anything and has nothing to do with the costly shipping. Instead, he focuses on developing ever more effective customer profiles and strives to steadily increase the proportion of products that are actually retained.
Success story: Consulting for male fashion muffles
A good example of the consistent implementation of the assisted shopping is the men’s fashion shop MODOMOTO of Curated Shopping GmbH from Berlin. The company specializes in dressing men who do not have the time or desire to shop themselves. For this purpose, style experts compile suitable outfits on the basis of the customer profiles, which are regularly sent to the registered users of the shop. Of course, you only have to pay for the goods that the customer keeps.
Chances of success bulky goods – DropShipping with large and bulky products
Large and bulky products are very unpopular among online merchants. The large space requirement in the warehouse and the increased effort for handling and shipping make such articles problematic.
Actually the trade with large and bulky products is a fine thing. The unit price of such articles is comparatively high and thus ensures good sales and profits. Since not many dealers deal with products that are difficult to transport, the competition is low and the feared price war is not taking place. Due to the fact that customers thoroughly consider ordering a very large product, the return rate generally remains far below average.
But even all of these clear benefits can’t get most online merchants to make friends with particularly heavy, bulky or large products. The aversion to the immense space required for storage, the difficult transport handling and the high shipping costs is too great. And so it can be explained that the supply of whirlpools and swimming pools, carports and tool sheds, garden houses, prefabricated garages and fountains or other space-consuming items on the Internet is still comparatively small. Those who nevertheless decide to trade in such goods can claim the many advantages of this product class for themselves. However, he also has to struggle with the disadvantages already described and often has to pay on top.
The situation is completely different for online retailers who use drop shipping to deal with heavy, large or bulky products. Since they are not responsible for storage and shipping themselves, these tasks are ultimately taken over by the respective supplier, they are also not affected by the disadvantages. And since the goods only have to be transported once on their way to the end customer, they can be offered much more cheaply than their competitors.
Good prospects – bulky goods as a success factor
There is a whole range of large and bulky products that are excellent for trading via drop shipping. It is particularly advantageous that the manufacturers of such goods have to deal with each individual order logistically anyway. This makes them more willing to be convinced by a business model based on drop shipping. Take advantage of this potential as a dealer and simply approach interesting suppliers about an appropriate model.
Individualized products via DropShipping
The human urge for individuality is unbroken. This is why personalized products are also very popular in online trading. Anyone who combines this trend with drop shipping benefits in two ways.
People like to differ from each other, to cultivate different qualities and characteristics and to show them clearly to the outside world. We like to dress individually, adorn ourselves with unique accessories or cultivate a personal style when it comes to furnishings and lifestyle. Those who attach great importance to individuality will sooner or later no longer be satisfied with mass-produced off-the-shelf goods: Instead, he goes in search of articles that he can adapt to his personal taste.
This trend has left a clear mark on online retailing in recent years. More and more Internet companies offer their customers the personalized design of the offered products. In this way, very personal gift ideas are created, garments with a certain something, hand-decorated sweets with individual messages or very private coffee or tea blends for special connoisseurs. Correspondingly positioned online merchants can benefit considerably from such business models. Customers feel particularly well taken care of in such shops and quickly develop trust in the provider. They also like to come back for more shopping and often make recommendations to friends and social networks.
In addition, the media are also often interested in particularly original ideas about individualisable products and thus ensure results in press and public relations work. Combined with the DropShipping trading model, the sale of personalised goods naturally offers many advantages. Since not only the order processing but also the modification of the products is outsourced to the supplier here, the retailer incurs comparatively little effort, which is in very good proportion to the achievable sales.
Success story: T-shirts à la carte
The t-shirt manufacturer Spreadshirt.de offers its commercial customers an interesting drop-shipping option. Here you can create any designs for T-shirts and offer them in your own shops. If an order is placed, the selected shirt is printed directly at Spreadshirt.de and also sent from there to the respective end customer. Even the billing can be done by the provider. In this case, the dealer receives a fixed agreed commission for each sale.
DropShipping with digital goods
Successful business models on the Internet do not necessarily have to be based on objective products. Digital goods also offer amazing earning opportunities for drop shipping entrepreneurs.
The Internet enables, among many other options, the sale of digital products. These are made available for download on the servers of the corresponding providers and can be delivered to the customer in a very uncomplicated manner. This results in only marginal delivery costs. Since there is no physical dispatch, there are only costs for storage and data traffic, which are by no means comparable with the high postage charges of parcel services.
In addition, digital products offer the great advantage that they are available to the end customer immediately after downloading. This means that they do not have to wait long, but can immediately enjoy downloaded music titles, films, software, books, newspapers or magazines. This immediate availability significantly increases the probability of successful sales. Almost everyone has found themselves accessing an interesting or exciting app immediately because the prospect of being able to use the program immediately was simply too tempting.
Now one can ask oneself what are the advantages of DropShipping if products do not have to be shipped physically anyway. The answer is obvious, since the drop-shipping supplier for digital offers in this case not only provides the products, but also the necessary technical infrastructure. The dealer does not even have to take care of servers, bandwidth and the necessary structures for downloading files, but can concentrate entirely on marketing his offers and looking after his customers. Another particular advantage of this model is that there are neither delivery bottlenecks nor costly returns. For the DropShipping dealer, there is a very good relation between the required effort and the possible turnover.
Digital products for download
Drop shipping does not necessarily imply the physical shipment of goods. In the digital age, the supplier may just as well make products available for download on his servers, which are then accessed by customers of connected drop-shipping shops. In this way, by the way, the realization of astonishingly large and varied assortments is easily possible. And since returns are not possible with this business model, a critical cost trap of the trade in question is simply omitted.
Target group commercial customers – B2B trade via DropShipping
As a DropShipping retailer, interesting target groups are not only found among private consumers. Trade with commercial customers can also be very lucrative and lead to high sales and profits.
Together with conventional online trading, the B2B sector is also booming in Germany. It is not surprising that the trend towards shopping on the Internet has not stopped at commercial buyers either. In professional procurement management, too, the advantages of e-commerce have long since been recognized and, above all, the uncomplicated processing and pronounced transparency with regard to conditions and prices have been enjoyed.
The trade with products between two commercial parties has one unbeatable advantage: In the B2B sector, the customer has no right of withdrawal. In addition, commercial buyers are less prone to returns and complaints anyway, as they do not make their purchases on a whim, but on the basis of an operational demand situation. This generally results in significantly higher purchase quantities, which in turn has a positive effect on the online retailer’s sales volume. In addition, there is another important advantage: business people can usually establish stable, sustainable and long-term relationships quite quickly. In this way, appropriately positioned dealers can build up an interesting customer base within a comparatively short period of time.
If B2B trading is combined with the DropShipping principle, further advantages are added. Of course, the reduced capital commitment and the discontinuation of warehousing and logistics also had a positive effect on the business result in this area. In return, however, the DropShipping retailer should make an even greater effort to ensure the reliability and professionalism of its suppliers, as business people pay particular attention to performance. Who delivers a bad achievement here, remains usually not long in the business and acts fast a bad reputation.
B2B trading for DropShipper
For the B2B trade on the basis of DropShipping many product areas can be found which are connected with good market chances. In the search for a suitable business idea, one should think about the regular needs of companies and try to discover a product area that has not yet been occupied by many competitors. As with all B2B business models, the most important factor here is the reliability of the affiliated suppliers, who must be selected with particular care.
DropShipping trading on marketplaces
Thanks to many marketplaces and sales platforms, a flourishing online trade via DropShipping is now also possible and sensible without your own web shop. Provided you have the right concept.
At first glance, the business model of e-commerce without an online shop may sound absurd. After all, one can assume that one’s own web shop is the center of commercial activity on the Internet. This does not have to be the case, however, because it is also possible to offer and sell your products via one or more of the well-known large marketplaces.
The advantages of this conceptual approach are obvious. If you post your offers on platforms such as eBay, Amazon, Yatego or Dawanda, you don’t have to worry about your own shop software or the running costs for servers and traffic. Instead, he enjoys the all-round carefree package of the respective marketplace operators, on whose pages he also encounters significantly more potential customers than could ever be the case in his own shop. Such a model is particularly suitable for beginners in e-commerce, as they can gradually grow into the tasks of an Internet entrepreneur in this way. In the case of marketplaces, many marketing functions and search engine optimization are fixed features of the service offered and do not have to be performed by the online retailer himself. It is also possible to internationalize your own business in a comparatively simple way, as many platforms offer corresponding additional functions.
In combination with DropShipping, online trading without its own web shop becomes a universal business model for beginners, part-timers and all those entrepreneurs who do not want to invest their whole life but only part of their time in self-employment. Without special risks and without an excessive investment of time and money a sustainable business model can be built up within a very short time.
Success story: Thermometers directly from the manufacturer
Woiwode GmbH & Co.KG provides a vivid example of the sale of products on the Internet without its own online shop and on the basis of drop shipping. The company does not sell products directly via its own website and instead operates a web shop at Yatego as a certified provider. Here you can buy everything from small pool thermometers to luxury weather stations, now more than 1,400 products. If a customer orders one of these products, it is delivered directly from the manufacturer to the end customer.
In the normal online shop – DropShipping as a basis
To be successful with DropShipping, it does not necessarily have to be an unusual and complex concept. Sometimes the normal online shop is enough if you know how it works.
The closest example of an interesting drop shipping business model has been saved for the end of our list. This is about the operation of a very simple and normal online shop on the basis of DropShipping. While the models presented so far have mostly dealt with a combination of different concepts, it is also possible to operate almost every existing online shop on the market on the basis of DropShipping in order to benefit from the outstanding advantages of this trading principle.
The business model offers almost every Internet entrepreneur the unrestricted opportunity to set up and operate their own online business without significant investments and risks. There is no need to invest large amounts in purchasing goods, rent storage space, purchase packaging materials or hire logistics staff. The entrepreneur merely takes care of a suitable shop system, the desired products, the marketing of his shop and his offers and the care and advice of his visitors and customers. All other tasks are reliably performed by the connected DropShipping suppliers, without causing work or costs on the part of the online merchant.
The DropShipping business model has long since ceased to be an exotic concept and is already being successfully pursued by a whole range of online retailers on the one hand and wholesalers or manufacturers on the other. A good sign of the resounding success of the trading principle is the fact that more and more DropShipping suppliers are also offering their dealer customers a suitable shop system directly. In many cases, this can be used very cheaply or even free of charge and is of course optimally matched to the operational processes of the respective supplier.
Success Story: Beautiful Living with DropShipping
There are many examples of successful DropShipping shops. But one thing we liked very much: The online shop “finally at home. de”. Here interested customers discover a large selection of products for the table and table, the modern kitchen, a cosy interior or, most recently, for an atmospheric Christmas decoration. The entire assortment is so much from one casting that one does not even think that it could be a DropShipping offer.
More equal opportunities in the start-up scene
For the normal founder, the more seed capital he has at his disposal, the easier, safer and more promising it will be for him to set up his business. Accordingly, young entrepreneurs who come from wealthy families, whose ancestors themselves already owned companies or who have already been able to acquire considerable start-up capital through other professional stations have a clear advantage here.
Those who instead have to found more or less pennilessly are usually in a much worse position. Either he seeks external financing, which is not easy for newcomers in particular, or he chooses a business model that can be realized without special capital.
While the choice of such concepts was quite modest until recently, this situation has changed considerably due to DropShipping. Thanks to DropShipping, even penniless founders today have the opportunity to launch almost any business model based on online trading without capital. This situation is tantamount to a revolution within the founding scene, because it ensures genuine equality of opportunity.
In 10 easy steps to a successful DropShipping company
Anyone who feels called to start their own drop shipping company in the face of this situation needs not only a good business idea, but also a kind of roadmap that shows them step by step how to set up an optimal company.
Find out how to develop and critically review a business idea, how to search for suitable suppliers and negotiate optimal conditions with them or which important formalities have to be completed and which legal regulations have to be observed.
Discover our 10-point guide to starting a DropShipping business:
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