There has been a steady growth in the number of small businesses that are using dropshipping to maximize their profits. It’s a great way to save money without sacrificing quality.
As the years go by, the various trends in dropshipping have changed. One of these is reverse dropshipping.
In this post, we will look at what reverse dropshipping is and you can then determine if it’s a side hustle you should try.
What Is Dropshipping?
So before we dive into reverse dropshipping I should probably explain to you what regular dropshipping is.
Dropshipping is a business model where a retailer doesn’t keep the exact products they sell in stock. Instead, they sell them to another business, which then ships them to their customer.
You handle ZERO stock. You’re a middle man. Here’s an example:
First, there is a customer who places an order on your site.
Your order will be sent to a third-party supplier after that. These suppliers then handle the whole shipping and delivery process.
Lastly the customer gets the product and you get a huge profit while you did almost no work at all!
Through drop shipping, retailers can offer lower prices without having to spend more on their inventory and storage.
What Is Reverse Dropshipping?
Reverse dropshipping is a lot like regular dropshipping but with some minor changes… AKA Reversed.
Traditional dropshipping works by sending items from low-cost countries like China and India to rich countries like the U.S. and Germany.
That way, you get these items cheap and can sell them at a higher price.
So for example. You receive an order from a customer for $10, and you send it to a dropshipping supplier in China for $1.
You will then pay anywhere from 10 – 20% for the dropshipping services, and you make a $17 profit effortlessly.
Now how do we reverse it?
The concept behind this strategy is that people in China are looking for high-quality products that they can afford, while Americans are trying to get them at low prices.
That’s the whole idea of reverse dropshipping.
This model involves sourcing high-quality products from countries that usually import them. These countries then resell these products in their own markets.
The logistics of it sound strange however it works well.
What Are the Pros & Cons of Reverse Dropshipping?
Now you’re probably wondering if you should start a dropshipping store and while this all does sound fine and dandy; there are some things you should be aware of.
There are many advantages to reverse dropshipping, but there are also some drawbacks. Before you make a final decision, make sure that you thoroughly consider all of the options.
With that said, let’s take a look at some.
The Pros of Reverse Dropshipping
Higher Margins
In fact, you can earn more from this model instead of traditional dropshipping.
That’s because you’re only focusing on high quality products and only selling a few of them which in turn gives you a higher profit margin.
Plus because these items are of higher quality your brand will have a better reputation. When you sell items the traditional dropshipping way you are selling cheap, likely to break items which means your returns will be higher and people won’t want to buy from you.
Less Competition
Traditional dropshipping has a lot of competition nowadays but that’s a good thing if you want to get into reverse dropshipping.
This is a great opportunity for anyone wanting to start an eCommerce business. It is relatively new, and it has plenty of potential.
It’s all about finding the right niche and ensuring your customers are happy.
Build a Luxury Brand
As you start selling your goods online, you’ll improve the brand awareness of your business by increasing the number of customers that come to your store.
Once you’re able to build that trust with your customers you can begin the process of shifting from a reverse dropshipping business to a real online store.
And trust me, if you can get it to that level, you can start earning millions.
The Cons of Reverse Dropshipping
Instead of just relying on dropshipping, reverse dropshipping often requires more work to find reliable suppliers.
It’s extremely difficult to market compared to standard dropshipping.
You’ll also have to spend a lot of time and effort looking for quality third-party suppliers, since they are usually more expensive and require more start-up capital.
Additional Costs
In some countries it’ll be much more difficult to do reverse dropshipping.
Due to the various duties and taxes that are added to the price of dropshipping products, it has become more difficult for consumers to shop for them. This issue increases the prices of these products.
Not knowing how to handle reverse dropshipping can be very challenging. This is why it is important to thoroughly research the various aspects of this business before getting started.
Summary– What’s Better?
If you’re a beginner and have no experience with online business, I suggest sticking with standard dropshipping.
The barrier to entry is much lower and I think it would be valuable to gain some experience before taking on reverse dropshipping. While there is no clear winner of which model is better, I believe that reverse dropshipping is much more difficult and some prior experience in eCommerce is recommended.
But, if you are a passionate entrepreneur, or just want to stand out, then reverse dropshipping may be the right fit for you. It can be very rewarding and it can also be an excellent way to build your own brand.
In the end, it all depends on what you feel comfortable with.
FAQ
Is Dropshipping Illegal?
No it is not.
It’s a technique that allows retailers to sell products without ever owning them.
They don’t have to be located in a specific country or region to sell their products online. Just connect with the right people and get started!
Can you fail at dropshipping?
Yes, it’s definitely possible.
Having a proper plan and strategy can help boost your business. It can also help avoid getting bogged down by the endless list of requirements and regulations.
Can you get rich in reverse dropshipping?
Yes, you can get rich in dropshipping.
You will also need to spend a lot of time studying how reverse dropshipping works. This will give you a huge advantage in finding suppliers who are willing to work with you.
Does reverse dropshipping work for any niche?
Reverse dropshipping may or may not work depending on your niche.
It’s better to choose products that are in high demand to have more potential customers.
