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Profitable Business Model? – The Process of Drop Shipping – A Profitable Business Model?

An exploration into drop shipping, a model used for the ecommerce business industry,

is a popular method for, increasing customer experience levels, while streamlining

the product distribution process.


Again, this ecommerce product item can include,

the below following product types:

  • Software Intangible Products
  • Hardware Tangible Products 
  • Goods, transfer and service


Profitable Business Model?

The process of this business model is, a popular method for ecommerce

business transactions. This is because of its simplicity and ease of use.

This is for both the consumer or online shopper, as well as the

online merchant or business establishment.


Case Example – Profitable Businesses

Case Study of Drop Shopping and Ecommerce Business Model?

Case examples, can help to provide a better overview of the

entire process in a working format. The empirical electronic trail,

can help new and seasoned business investors, approach the right

business model for their ecommerce business needs, on and off the field.


Business Outline?

So, without further ado, let’s look at a case example for a clearer outline

and business approach to buying or selling ecommerce websites.

This is a great case study analysis on drop shipping for ecommerce business models.

Why you ask? Because, in this example it shows how drop shipping’s effective

rate was from the year 2007, at the time when drop shipping was utilized for

this business model. This process is then examined and compared until todays

current perspective, some eleven years later, in 2018! This case study from

ecommerce fuel, sheds light onto the main factors for choosing drop shipping.



These reasons which were included back in in 2007, are as followed:

  • A business plan and operation that would offer low risk to reward ratio 
  • A business venture that offered little capital or start up fees 
  • Be scalable, no matter size or volume. 
  • Location and geo targeting, remote login and remote connection


Now, the above reasons for deciding on a drop shipping business model

for an ecommerce website, still hold true today.


Building Ecommerce Business?

However, the process of building a meaningful drop shipping ecommerce business,

that generates real wealth, through real online methods,

may not work as successfully in present day, 2018.

The Ecommerce Business Landscape in 2018 – This business foundation and

model for ecommerce has changed and evolved over the years, especially

over the last decade. This is because, the competition pool levels have

increased drastically, from 2007 to 2018. According to ecommerce

business statistical information, this new and trending phenomenon

of more and more businesses, entering this arena, industry

and online marketplace, has changed the playing field forever.


The Amazon Generation of Ecommerce Business

This new competition pool of ecommerce and drop shipping, has been

overtaken by the world of Amazon. According to case studies on Amazon

and eBay, these two businesses are the great 2 Giants of the ecommerce world.

Keep in mind however, that you do not need to dropship as a seller to

participate in the online marketplace. However, since Amazon participates

in this process more than eBay, their business practice is growing at a

much faster rate. So, if you look at the comparison between Amazon

and eBay, just from a distribution and online drop shipping process,

Amazon rises above all the major competition.


Online Websites?

Not only is Amazon a leader in this forum of business models

in the ecommerce world, it has also shown how effective it’s use can

be if incorporated correctly within the online website. eBay has taken a

backseat to Amazon in this drop shipping race, if one should exist.

There are different channels and options in deciding the best

possible distribution process to your ecommerce website.


Case Study Success –

Ecommerce Integration of Drop Shipping Amazon, and other

online powerhouses of drop shipping in the ecommerce trade of businesses,

understand the online market place of their buying clients.

This is helpful, since so many business dynamics exist within the business

interaction and process stage. The ecommerce business alone, has transitioned

many consumers, into online and active buying participants of a drop shipping

business. The consumer however, may not understand the process of drop shipping,

but if the delivery and execution of the product is provided in an efficient manner,

the consumer to business relationship, is intact. However, any misfortunes or

misgivings, can alter this balanced business model between consumer transactions online.


Expectations of Business?

Meaning, if the customers expectations are not met through

the ecommerce sites of doing drop shipping, then the online business

may face a decrease in online conversions and other business-related success.


Drop Selling & the Major Players

This process of selling business goods through the form of drop shipping,

can be accomplished and be successful as mentioned

in earlier examples, for new business ventures.

The only downfall is the increased competition levels, due to all the hype

in ecommerce business increasing in sales, both with the online

consumer marketplace, and the selling of an online business.

This is because, with an increased competition level of new businesses,

either buying or building, into this niche market, the selling of other

individuals products becomes more difficult. As you can imagine,

the selling of one’s goods can be a challenge for a business owner or investor,

but this challenge only increases when these products are from a 3rd party source.


Winners Circle of Business Model?

So, if it has become more difficult to launch a successful drop shipping

ecommerce business model. So, what can you do to

compete in this online marketplace?


Solutions for Ecommerce Competition of Drop Shipping

There are positive ways to overcome the increasing competition in the

business pool of drop shipping and ecommerce business types.


Some of these solutions are as followed:

  • One such solution, can come from offering a large amount of informational value to your products and business. 
  • This means, you can sell higher margin products and accessories than your competition. 
  • Lastly, you can drop shipping for your ecommerce business, as a supplement to your shopping catalog. (This would be in accordance with your own proprietary products.)


Profitable Business Model


Expectations of Profit Margins for Drop Shipping?

This is the bottom line for most business owners,

regardless if online, or if is a physical retail location.

So, looking at a drop shipping business, the profit margins, depend greatly on

the actual products you or your business sell. Let’s say you have an

electronic software business online and sell electronics to your consumers.

The profit margins are thin in this case, and will likely go in this direction,

from the 5 to 10 percent range. The low-priced products,

will provide profit margins that will be in the 100 percent range.


Business Margins?

The business of drop shipping margins is normally between the 10

and 15 percent range. This will help in determining how you will

set up your drop shipping business, once acquired or built.

Where do you sell Drop Shipped Products, Anyways?

This is important to understand, since this is the assembly line for

transporting goods. Goods and products, that your online consumer

base is waiting and depending on, once ordered.


Business Observance?

So, to answer the question, where do people sell drop shipped products, is to,

look around online first. You may have already used a drop ship company

and system, without even knowing it. This is because, many people now, in 2018,

can sell their products from anywhere in the world, per se.

This means, about anywhere will do to set up shop and business operation.

Remember, the location freedom to do business, and remote use of doing

online business is on your side. This is because, many of the products

do not require a physical location for data and product storage.


Product Sales for Drop Shipping Business

Many of these products or good for sale, will come from large

giants like eBay and Amazon. This is because, these two entities for example,

use fulfillment through drop shippers. Today, thousands of eCommerce sites,

use these online giants, to push their products to the online marketplace.

This is achieved as you already know, through entities such as:

  • Amazon 
  • eBay


Business Examples?

There are more examples of ecommerce businesses that use a myriad of different means.

Some of these means can be a hybrid or collection of both, that is drop shipping

and some other form of distribution use. This is because, not all products are

valued in the same method or process, as other products. For example,

Home Depot, uses the drop shipping model for less popular items they

have in stock. This is because, the point is to clear out the least popular

and effective methods for optimizing business results. A broader product

selection is the result in the above method. This also helps to limit other

product inventory, to maintain the constant flow of business and ecommerce.


Best Solution for Your Current Business

So, when deciding on a new business venture, or to add to your existing one,

creating an actionable plan for your ecommerce site is the best foundational

step in this process.


This will help you improve your:

  • business scalability, 
  • profitability, 
  • and long-term business success.


Business Overview?

So, now that you have a good understanding of the simplest from

of ecommerce on the online marketplace, keep a close eye on your shipper.

This will help you integrate your store front efforts with your online website

traffic and online inventory. However, there are areas you need to

keep tabs on when looking at ecommerce sites to buy, or already have one in existence:

  • Lowered Product Quality Expectations 
  • Problems with actual order 
  • Your business is in direct target, for example bad online reviews from “review sites”.


Software for Drop Shipping?

Yes, software for drop shipping does exist, and should be considered

in your business plan or strategy. For example, there are many drop

shippers that use a model to set a quick store with online organic traffic.

This is through such software as Shopify, as an example.


What is Shopify?

According to Wikipedia, shopify is a Canadian ecommerce company.

It has a main location hub in the providence of Ontario, Ottawa.

It also, is the propriety ecommerce platform for online stores, and retail

point of sale systems This company according to Wikipedia, reports more

than 500 thousand merchants using this platform. This is no surprise to learn,

that over 45 billion dollars in gross merchandise volume was totaled.


Product Models for Ecommerce

Each ecommerce business will have a different technique or

online transaction method. These methods are for supplying

their products online to consumers, and/or other business entities.


These can range from the following:

  • 1. Single Product
  • 2. Single Category
  • 3. Multiple Category
  • 4. Affiliate
  • 5. Hybrid


This brings us to our next area of discussion, which is ecommerce business classifications.

So, what exactly is ecommerce business classification, and why should it be

important to you and your business buying or selling position?

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