If you are interested in starting your own company, you have probably heard a lot about dropshipping as an option. Objectively speaking, dropshipping is a great way to get your company off the ground with a smaller overhead and a shorter time frame. On top of that, if you continue to maintain your dropshipping as you go along, it can be a great way to automate aspects of your business so that you’re not spending so much time on aspects that don’t really need it.

In short, you guessed it: drop shipping is also a great way to generate passive income or income which doesn’t require a “hands-on” approach. We will talk about that and other benefits of starting a dropshipping business later on.

Dropshipping is the key to allowing you to pursue and grow your business interests, without sacrificing your other goals and dreams. Literally, it sounded like the best of both worlds. So what exactly is drop shipping, for the uninitiated? Simply put, the drop shipping method means that a business outsources its manufacturing, and puts orders in on an as-needed basis.

This means that the company doesn’t need to keep stock, doesn’t need to pay for warehousing or storage, and doesn’t even need to directly deal with the items that they sell.

Let’s take a look at these dropshipping supply chain components now:

1. Entity 1: The Creator of the Product ​also known as the manufacturer.

2. Entity 2: The Vendor ​after the manufacturer, the next dropshipping supply chain entity is known as the vendor.  The vendor is the point in the supply chain that will sell the products that the manufacturer has made to large retail stores in order to make a profit.

3. Entity 3: The Seller ​Since you’re most likely not going to be the manufacturer or the vendor, the place that your business will likely fit best is within the seller portion of the supply chain.  The seller can be best described as an individual or small business who purchases the product from the vendor. The seller makes his or her profit by making sure that the price at which they’re selling the product to their customers is higher than the price at which they bought it. 

If you’re still wary about whether or not drop shipping can be profitable for your wallet and bottom line, considering the following factors will help you to see why dropshipping works in today’s technological world and how easy it is to make a passive income from it:

1. Low Investment: To start an eventually profitable drop shipping business, you do not need to mobilize massive amounts of funds. In fact, you can start a successful dropshipping business with ₹5000.

2. Massive List of Products: When you start a dropshipping business, you can market any sort of product. You can create a combination of different products, or venture into one product category and offer its assortment; the choice is entirely yours.

3. Location Independence: because a dropshipping business does not require a storefront, you can run your business from anywhere as long as you have a computer and an internet connection.

4. Zero Storage Space Requirement: When you opt to dropship, you opt out of creating or procuring products; therefore, you opt out of having to rent a warehouse or storage space. This saves you more money, time, and effort.

5. Less Risk: Because a dropshipping business does not need you to invest a large amount of money upfront when you start one, you do not need to worry about your financial liquidity. This automatically reduces the risk involved in starting the business.

6. Highly Scalable: Dropshipping businesses are highly scalable simply because when you dropship, you do not need to manually fulfill orders.

Understand it better with a real-world example:

We ought to expect that you choose to sell guitars. With a standard store, you would need to buy in physical stock so you buy 25 guitars and store them. By then you would need to find customers who need to purchase the guitars. Assume that you sell 3 guitars and a while later arrangement drops off. You leave the business and end up with a room overflowing with guitars that you can't sell and no money in your budgetary parity. 

With drop shipping, life is significantly less difficult:

1. You set up a website with an online store to sell guitars.
2. You sell a "Silver Shadow" guitar for ₹3500
3. You get a solicitation for one Silver Shadow through your online store.
4. That demand is sent to your supplier – the producer or distributor that you have picked.
5. They charge you ₹2000 for the Silver Shadow notwithstanding ₹100 for them to send it directly to your customer.
6. The supplier will pack the solicitation and pontoon the Silver Shadow to your customer.  
7. You make ₹900 on the arrangement.

Dropshipping has been proved as one of the most profitable passive income sources you’ll find online.

You don’t have to be a tech guru or require to know some coding language or at least have some technical knowledge under your belt.  With drop shipping, it’s nothing like that.  Today, services such as Shopify and Amazon FBA allow you to develop a dropshipping business in the easiest way possible.

Not only that,  both Facebook advertising and other types of advertising such as Google AdWords have made this type of marketing possible.  When you use Facebook and Google AdWords marketing tools, you’re able to see how many people are reacting to the ads that you’re posting.  With these data analytic tools that these advertising services are able to provide, you get to see how well your ads are doing so that you can tweak them whenever.

With drop shipping being easier to do than ever before, this is yet another reason why it can be beneficial to your pursuit of greater income.  Additionally, this means that you mostly have to worry about finding the best product to sell that will lead to the ultimate profit.