What Is Dropshipping And Why You Should Start Doing It

Selling Online
  • Starting an ecommerce business is bound to be a profitable one, especially in Australia, where statistics show how much the population loves to shop online.
  • Now that it's settled, there's one more thing to discuss: what kind of ecommerce business will you be and whether dropshipping is your answer to that question.
  • So without further ado, keep reading to find out more about dropshipping and whether it is worth the entire buzz. 

dropshipping ecommerce business

Regardless of where you go for your Australian ecommerce statistics, they tell a similar story – Australians like to purchase stuff online and they will do even more of it in the future. Fashion and electronics lead the way, according to Statista, while other segments are gaining traction too.

As a result of this, there is an increasing number of Australian ecommerce companies fighting for a piece of that cake and, in the last couple of years, we are also seeing dropshipping ecommerce companies popping up as well. It is a concept that has absolutely exploded in the United States (and many other countries) and it is no wonder more and more Australians are considering it as a potential small business idea.

What is Dropshipping Ecommerce?

As opposed to "traditional" ecommerce where you either manufacture your own product or build an inventory from suppliers and then sell it, with dropshipping, you never actually handle any products yourself. Instead, you set up a channel to a supplier (often a manufacturer) who then ships the product that you sell in your online shop. You charge the customers more than you pay the supplier and the margin is your income.

You set up your online shop, find suppliers (we will focus on AliExpress) and do marketing that will bring you customers. Thanks to modern dropshipping software and existing ecommerce platforms, setting everything up is really easy and most of the subsequent work is automated. This enables you to concentrate on attracting customers and making sure they purchase from you.

Due to the fact that you are not building an inventory, your initial investment will be miniscule and the nature of dropshipping also allows you to try your luck with various niches of products quickly and without any penalties if stuff doesn't work out.

These are just the basics and Shopify has a great guide on drop shipping where you can find much more information.

Why AliExpress?

By now, you are probably wondering why we are tying up dropshipping in Australia with AliExpress. Well, being the largest Chinese ecommerce marketplace, AliExpress gives you the best chance of finding suppliers whose products will be affordable enough for you to sell to your customers with an added margin. Namely, since your margin has to be at least 50% (meaning that you charge double what you pay), you need to find affordable products that won't be too expensive once you claim your margin.

Another reason why AliExpress is a great choice is that they know all about dropshipping and there are plenty of suppliers that actually specialise in this. Thanks to ePacket shipping, delivery times from AliExpress have also been reduced and become more affordable.

Of course, the fact that you will be doing business via AliExpress means that you will never be selling branded products at your store (truthfully, dropshipping is never about branded products). Instead, you will be purchasing generic products or brands that are unknown in Australia. It should be pointed out that some suppliers with whom you build a relationship might actually do custom branding and packaging for you. But this is advanced dropshipping.

A Few Basic Tips

There are a few things that you have to keep in mind if you want to start making money with your dropshipping business. For one, you want to pick the products and/or your niche smartly. Find out what Australians like to buy online and where the competition is not too stiff. Also, make sure it is something that people don't mind buying if it's not branded.

For example, trying to dropship unbranded Chinese smartphones might not be the best idea. On the other hand, selling smartphone accessories such as cases or headphones might actually work really well.

It is also essential that you find reputable suppliers whose products will be of decent quality, whose responsiveness is stellar and whose packages will arrive in good condition. It may take a while to build a list of suppliers, but you should never rush this.

Another useful advice would be not to concern yourself too much with your website at first. Go with one of the templates that platforms such as Shopify and Woocommerce provide to their users and do not complicate things too much. Dropshipping entails quite a bit of trial and error and wasting too much time and money on your store initially is not a smart investment. Later, if it picks up, you can easily start thinking about more serious branding and presence.

The same goes for initial marketing. Your only goal is to make a few sales and all of your marketing should be aimed at this. The most straightforward way to do this is to do some paid ads, usually on Facebook and Instagram, while some people also do Google Ads (which can be quite expensive). Facebook ads are particularly popular because they can be very precise in targeting your segment of the market and provide a good return on investment.

Closing Word

AliExpress dropshipping is an affordable business idea that does not even require too much time, especially early on. It is also an entrepreneurial choice that allows you to experiment without wasting too much money. With some smart practices and willingness to learn, you might just make a nice living doing dropshipping.

We will leave you with one statistic – Australia is actually the second-best country in the world when dropshipping conversion rates are in question. Trust us, this means a lot.

James Burbank

Spent almost 15 years in the trade show industry. Consulted Australian and U.S. based companies who wished to exhibit in exotic markets such as Southeastern Europe and Central Asia. Currently on hiatus and spending time with my family. Editor-in-chief at BizzMarkBlog.

Comments (1)
David Glines

David Glines

According to statistics, as you may have already noticed, Australian ecommerce business is rapidly growing in spite of the fact that similar American companies do not lack increase.