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Is Dropshipping Profitable in India?

If you are an E-Commerce enthusiast in India, you must have come across term – Dropshipping several times. In 2011, 34% of Amazon sales were executed by a dropshippers and the figure has increased since then, a report says. Dropshipping has been in vogue in India. But if you are new to the field or eager to aggrandize the benefits of your E-Commerce store, Dropshipping can seem to be tricky and intimidating. Therefore, we will provide you with a comprehensive understanding of its principles and application in India is crucial to figure out its profitability.

Understanding Dropshipping Mechanism:

Dropshipping is an E-Commerce business model for retail fulfillment that does not require keeping any inventory in stock. In simple words, the store has the products purchased from a third party supplier and then directly shipped to the customer. There are three parties entailed in the dropshipping process – the retailer or the seller, the dropshipper and the end customer.

Understanding How Dropshipping Works (With Vendorboat)

The Dropshipping model with Vendorboat works in the following ways:

  • A retailer puts up an E-Commerce online-business store which exhibits a wide range of products.
  • A customer explores the website in search of the product he is looking for.
  • The retailer notifies the dropshipping company or partner i.e. Vendorboat, as soon as the order strikes in.
  • Vendorboat then manufactures, packages and delivers the product to the end customer under your brand name.

The profitability of the seller depends on the difference between the retail price and the wholesale price. Sometimes, the seller earns in commission by procuring a concurred percentage of sales as paid by the wholesaler. Although Dropshipping may sound like a walk in the park but it is not that simple. 

How Dropshipping Can Be Profitable in India?

Dropshipping is a profitable concept in developing countries like India for the following reasons:

  • Cost- Effectiveness: Dropshipping is beneficial for new start ups or businesses as it requires low capital to set up. This budget friendly model helps you cut back the initial monetary investments. 
  • No inventory tussle: You don’t have to worry about any inventory maintenance and warehouse operations, which also reduces your overhead expenses. With the higher cost of goods and taxation in India, Dropshipping allows you to produce as much as you sell.
  • Reduced risks: As compared to other businesses, the risk of loss is very minimal in Drop Shipping, considering the tax and shipment costs in India. Since products are manufactured only when the demand arises, there is no inventory left.
  •  Experimentation: Dropshipping allows you to experiment with various niche products as people now in India are more aware of the popular brands and purchasing power has also grown to an extent.
  • Online Commerce: Online trading in India has become a great deal with the increased internet penetration since the last decade. People now-a-days find online shopping more convenient. Plus, India being the land of multiple languages, with solidity in English, allows you to broaden your market space across and outside India. 

Risks Involved That Can Harm Your Dropshipping Profitability in India:

Dropshipping in India is not all rewarding. In spite of the profitability, there are a few risks involved which should be paid attention to. 

  • Excess shipping time: Because of incompetent transportation, the time needed for shipment may take more than the regular.
  • Back- ordering: It takes place as a retailer places a shipment demand with a wholesaler when the product is sold out. 
  • High costs: The sky-high prices of taxes and goods in India, may add excessively to your overall costs resulting in a loss.
  • Unprofessional behavior: Lack of coordination between the seller and the drop shipping company might affect the customer experience.
  • Scam: In most cases in India, there is an involvement of the middlemen between the seller and the drop shipper with no products of their own. This results in lower profits for the seller as they often charge high prices.

Conclusion:

With the exponential growth of the E-Commerce sector in India, Dropshipping has become very popular as it is an outstanding format for new business faces. Keeping in mind the above mentioned pros and cons, you must find the suitable niche and the right drop shipper for your business. Ideal coordination between you and your drop shipping partner and proper heed to customer satisfaction are the prerequisites. With correct evaluation and research, Dropshipping might work wonders for you. To let us help you with the same, please visit our website. 

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