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It is an indisputable fact that we live in the age of digital media. Everything we love is online – from our favorite shows to banking apps and food delivery.
Do you know what else is online? Shopping. And lot’s of it.
E-commerce dominates the online space, as brick and mortar retailers realize it is all about digitally selling. And you likely know someone who ‘wants to get into dropshipping’ or wants to sell ‘on a marketplace.’
But what does this mean exactly? And what’s the difference between e-commerce and dropshipping? If you want to learn all about selling products online, keep reading.
What Is E-commerce?
Long gone are the days when we need to trawl through a mall for the perfect outfit or go to a far-off store to stock up on party essentials.
Shopping has arguably never been easier. Shopping is optimized today because of e-commerce, which is the buying and selling of goods on the internet. Basically, all transactions for items are completed in the online space.
What are the main features of the e-commerce experience? Let’s take a look at the overview below:
- A website with a catalog of products available for browsing
- The customer is then able to browse these and select the items they would like
- The delivery address is entered, and then payment is processed online (or sometimes in person)
- The customer then receives their item
- Depending on the kind of product, the item may also be returned or exchanged
The best part about e-commerce is that it doesn’t necessarily need to be between a business and a customer. It can also be carried out between business to company, which is a highly lucrative vertical.
Benefits of E-commerce
Wondering how e-commerce helps businesses boost profits?
Let’s take a look at some of the main pros of e-commerce benefits below.
Unlike brick and mortar stores, location doesn’t matter in e-commerce. The main point of importance is that deliveries are made. The buyer isn’t looking to visit the store in person.
This is highly beneficial as it can save businesses a lot of money investing in a physical store. This money can then be used to grow the business in other ways.
2. Ease of Use
The buyer doesn’t need to worry about getting to a store or making returns in person.
All transactions and business are conducted through the website. This greatly incentivizes people to purchase items from the store. This can reduce the stress on the customer, especially as everything is taken care of by the seller.
E-commerce can be conducted anywhere, anytime. Shoppers can look for items in a way that best suits them. This has significantly triggered sales, as shoppers have reported they prefer to do all the shopping from the convenience of their own home.
What Is Dropshipping?
Dropshipping can be understood as a vertical within e-commerce. The model is like that of e-commerce.
However, it is a model that involves receiving and following orders but without retaining inventory and stock.
You may be wondering, how do businesses manage to stay afloat without physical inventory?
Well, dropshipping businesses sell products that they don’t produce. This means that when orders come in, they are rerouted to the actual suppliers of the products.
Dropshipping thus helps sell products that the manufacturer may be struggling with selling. This means that the entire reputation of their store depends on the quality and effectiveness of their supplier!
What Are the Benefits of Dropshipping?
There are many reasons dropshipping is advantageous. Let’s take a look at the main pros of this business model.
1. Lack of Inventory
This is a massive advantage. Imagine selling items without having to physically store them or pay for a warehouse to store them! Not to mention, organizing and keeping the products stocked takes labor, which again costs money.
The lack of inventory thus allows sellers to be more mobile. It is also a practical option for those wishing to try their hand at business. No wonder so many people today are getting into dropshipping!
2. Investment Level
Another reason so many business newbies are entering this space is that it doesn’t require a considerable level of investment. You won’t need funding or to dip into your savings account to undertake this business venture.
However, what you do need is a network of manufacturers and the ability to sell to buyers.
Like e-commerce, dropshipping can be undertaken from virtually any location. It can be run from whichever location is convenient to the business owner.
This again reduces startup collateral and funding.
Undoubtedly, the most significant advantage of dropshipping is the amount of support you get with it. You’ll have a ready catalog given to you by your supplier. They will also handle the inventory for you and the packaging, boxing, and delivery.
This is also beneficial in finding the point of mistake (if there is one). All paths lead to the supplier, which helps rectify and improve features like delivery times or quality.
What Are the Main Differences Between Them?
Although similar, e-commerce and dropshipping have some vital points that differentiate them. Both options are great if you’re looking for a second income stream.
But are you wondering which one you should opt for? Below, we break down the key differences between the two.
Upfront Costs and Investments
The initial investment levels are significantly different when it comes to e-commerce and dropshipping. For example, dropshipping is all about a lack of inventory. You don’t have to worry about warehouse costs or labor expenses.
The inventory is shipped out directly from the supplier. With e-commerce, on the other hand, the seller is held directly responsible for the merchandise. They will have to manage the ordering and retaining of stock.
Manufacturing and Procuring
Another significant difference between the two is the manufacturing investment. Dropshipping is all about finding a niche product that has excellent growth potential.
They will then need to find a manufacturer who has significant cost margins for them. Cheap suppliers are typically located in the US or China.
This is very different from the e-commerce process. E-commerce involves finding a factory for production, which then manufactures the items. This, of course, involves significant initial investment costs.
All materials and labor must be procured at the cost of the e-commerce seller too.
This brings us to our next point. You might be familiar with traditional brick-and-mortar stores that have lots of staff running around. Whether they’re at the cash-out counter or doing stock in the back, employees are non-negotiable.
However, both e-commerce and dropshipping reduce the need for such employees. With dropshipping, the need for employees is almost eliminated. Or, at the very least, a lot of the work can be undertaken by contractors or freelancers.
For example, you may need excellent website builders or graphic designers. Perhaps an assistant. But not much more than that.
E-commerce does require a little more investment in the staffing front. You’ll need labor to pack and ship the items out. But it is still considerably fewer employees than required in a non-eCommerce model.
Dropshiping is all about building a brand based on the wares of a supplier.
This is very different from e-commerce. In the e-commerce model, you’re able to sell your brand. This helps work towards building a business that will stand the test of time.
After all, suppliers come and go. In addition, you’ll be fully assured of quality, digital marketing strategies, and more. You’ll be able to exercise your creativity in all verticals. This allows you to craft your brand in the way you see fit.
You’re not liable to external forces, which will be highly appealing to many entrepreneurs.
E-Commerce and Dropshipping Are the Best Way to Build a Second Income Stream
There’s a reason why everyone seems to be getting into the e-commerce space. And is dropshipping worth it? Absolutely!
Both options are viable and effective in getting your foot in the online space. Any retail business model that utilizes a great digital marketing strategy is a win in our books.
But you know what you’ll need to succeed in this space?
A well-designed, client-focused and responsive website to start selling your new products! At Connect Media Agency, we specialize in creating the perfect website and branding, so your client experience stands out and is memorable.
Click here to book a free strategy session today!