What is dropshipping?

The main advantage of dropshipping is that you can sell merchandise without owning it. They do not have a warehouse and do not handle shipping. In principle, it works as follows:

• You need an online store where you offer products.
• The products they provide come from a manufacturer or another supplier.
• If a customer orders a product, you can forward the order to your business partner.
• Second, it sends the goods to the customer on your behalf.
• The customer pays the bill with you, and you pay the bill with your supplier.
• The difference between the buy and sell price is the margin with which you can make a profit.
• The margin should be large enough to cover at least fixed costs and operating costs as well as generate profits.

I am looking for a profitable niche

Finding a profitable dropshipping niche is the most important thing. You can do this in the mega markets, for example.

• Self development
• Hobby
• relations
• Money and finance
• Health and fitness

Find what you are looking for. A profitable theme serves the critical needs of people who are actively looking for a solution and want to spend money on it. You should also enjoy the topic. Do you like to do crafts and do a lot? You are guaranteed not to be alone. As a hobbyist, you can ship your desired craft supplies via dropshipping instead of opening a craft store. Another way to find profitable outlets is to search for best selling products on major stores like Amazon and Alibaba. Inspiration for profitable dropshipping outlets:

• Sustainable home products
• Energy-saving appliances
• Consumer Electronics
• Pet supplies

Find partners
To implement a dropshipping business concept, you need a solid dropshipping partner. You don't have to be a wholesaler offering a wide range of products. There are often small companies or individual entrepreneurs who want to work with affiliates using the dropshipping model. There are special product groups within the range of products that they wish to sell through as many merchants as possible.

Example:

Create an online store for thermos, thermos cups, fresh food products and accessories. To do this, you work with well-known manufacturers that offer professional dropshipping. During your market research, you will come across a previously unknown manufacturer from southern Germany that offers very specific freshness protection products to small amounts of truck drivers. You want to be included in the range. To do this, contact him and explain the details of cooperation with him. If a customer orders special truck update products from your online store, you send the order directly to your new business partner, who will ship the goods on your behalf and, if desired, to your customers in your packaging. Dropshipper is not visible to client.

Develop a clear concept

Anyone wanting to be successful at dropshipping needs a clear business concept. This applies not only to merchandise receipt, ordering, and shipment, but also to cancellation. The typical structure is as follows:

• You can create an online store and offer products from dropshipping affiliates.
• Customers order a product from the online store.
• Orders are sent to the partner merchant.
• The partner delivers the goods to the customer on your behalf.
• The customer pays you the invoice amount.
• You pay the product purchase price from your sales partner with no inventory.

If a customer canceled an order or wanted to return the goods, the ideal cancellation process would work as follows:

• The customer cancels the product and sends it back to the merchant.
• The merchant purchases the goods and pays the costs incurred.

If the drop-down partner doesn't process the returns and the customer sends the goods directly to you, then you definitely have to find a solution. Otherwise, you're sitting on the returned merchandise. One option might be that you can return returned items to the retailer every three months and not have to pay for unsold items. They should not be involved in the fact that you have to keep the returned goods. As an urgent solution, it is a good idea to make withdrawals on items that have been returned or sold for sale and in exceptional cases, take responsibility for the freight yourself.

Do you require a small business organization?

The main question that arises for every freelance worker at the start of a business is whether he should benefit from small business organization. Those who are afraid to deal with sales tax and fear not being able to deal with the current sales tax notice can demand small business regulation as long as sales are under € 22,000 and € 50,000 in the first or previous year. In the current fiscal year. Once these limits are crossed, small business organization is no longer possible.

Important: Please note that small businesses may be at a disadvantage compared to competitors eligible to deduct input tax if they are active in the B2B industry. If you require the list of small businesses, you will not be permitted to show sales tax on your customer invoices. However, business customers will be required to charge sales tax on their sales tax returns.

Since it is not possible to deduct input tax from your invoices, this means that the product costs for your commercial customers are higher than the costs of your competitors that show VAT on the invoices. Alternatively, you can forgo some of your winnings and reduce the total selling price to the net amount that the competition will charge itself.

Smart management and administration
If you prefer the concept of dropshipping, then administration and management should work as efficiently as possible. Ideally, the central information in the online store - that is, your sales - flows automatically directly into the accounting department. This works, for example, if the store software has an interface that matches the accounting software. For example, this is the case with the VersaCommerce store system, which can be plugged into Lexoffice accounting software.