Within the world of Dropshipping and e-commerce, the biggest news in 2016 came from the United States, where investigative reporters delved into this growing entrepreneurial sector, which is loved by many and loathed by only a few. Lets explore how 2016 fared for dropshipping.
An in-depth report about a successful American inventor who discovered the world of dropshipping almost by accident was published by Entrepreneur.com in early 2016. By the middle of the year, the story went viral as it explained how dropshippers used an interesting system to sell cat toys that they did not keep in stock. The inventor was surprised to learn of this system because he thought he had full control of his sales on Amazon.com; however, he noticed that some of his cat toys had been sold at a higher price by smart dropshippers who seemed to be better at online marketing.
The inventor was not the only one amazed to have discovered the practice of dropshipping; e-commerce analysts and even economists were also surprised with the Entrepreneur.com article. Economists were particularly interested in this retail trend because economists tend to be interested in any factors that influence commerce in a positive manner.
Although the Entrepreneur.com report included some dramatics, that can almost be expected in an era where a reality television star was elected American President. What the article accomplished was to elevate the profile of dropshippers in 2016. As a valid e-commerce business opportunity, dropshipping is developing rather quickly in Russia and in the People’s Republic of China.
It is interesting to note that China plays a major role in the world of wholesale dropshippers. The rise of online marketplaces such as Ali Baba and Ali Express has moved Chinese manufacturers to become direct suppliers for dropshippers abroad; however, this has not been the case within China until recently. The traditional Chinese system of distributors and retail stores that carry their own inventories is being slowly transformed by dropshipping, and the recent developments in the U.S. can be credited for this ongoing change.
Dropshipping in Australia for 2017
Although dropshipping has been around since before the advent of the world wide web, the 2016 news coverage on this business practice makes it seem as if it started when Amazon and eBay began taking online orders. This is clearly not the case.
It its most basic form, dropshipping involves minimising the logistics aspect of store inventory and warehousing, which is something that was widely practised in Europe after World War II. It is as
simple as a door-to-door salesperson offering a set of cookware pots and pans and having them delivered straight to a home the next day. The salesperson can only carry a set for demonstration purposes; if he or she does not keep inventory at his own home or at a nearby warehouse, an order can be placed for delivery directly from the manufacturer.
An even more modern example of dropshipping was set by the U.S. with the expansion of cable television in the mid-1980s, when commercial advertising shifted from brands to direct sales. Due to the high efficiency of the American postal service, shoppers could simply call a number on the screen to order an item that was often shipped directly by the manufacturer.
Once TV commercials matured into the American Home Shopping Network and QVC channels, dropshipping evolved from the single warehouses of manufacturing facilities to fulfilment and shipping centres that would later inspire Amazon.com. It took about 10 years for Australia to catch up to the U.S. with the launch of the Television Shopping Network, which would later be joined by the Expo Channel, Aspire TV and others. These retail operations use the classic dropshipping model of supply chain management, and they do quite well.
Australian entrepreneurs have only discovered the new online model of dropshipping in recent years; it has set in quickly and it is expected to expand in 2017. There is a great advantage in this regard, and it is closely related to the ongoing period of prosperity being enjoyed across Australia.
Another reason why Australia is ripe for dropshippers is due to the country’s good relations with China, which extend well beyond trade. Australia is closer to China than the United States and Europe by virtue of geography and diplomacy; whereas Chinese used to flock to California for academics, they have been thoroughly impressed with the quality of university education in Australia. The Commonwealth’s push to attract more Asian tourists has also paid off rather nicely in the last decade. All this is very important for Australian dropshippers who wish to establish strong relationships with Chinese factories and wholesalers willing to ship products directly from their headquarters or branch locations.
However it must be noted that the most fruitful and rewarding drop-ship relationships that exist in Australia thus far are still ones where the drop-shippers are actually shipping goods out of the USA. The main reason for this is brand awareness, favourable adjusted rates of the cost of products and probably the main point is that it is such common practice in the states that the processes have been perfected. Vendors located in USA understand what it takes to make drop-shipping work for Australian re-sellers of their products.
The Australian Dropshipping Advantage
Prospective Australian dropshippers have a language head start of sorts because English happens to be the lingua franca of e-commerce. This also means that Australian dropshippers can also expand beyond the Commonwealth and offer products to the global English-language community.
While many dropshippers are able to thrive by selling products only within local markets, more profitable opportunities await those who are willing to extend their reach and tap the global markets. Globalisation is actually at the hear of the dropshipping experience in more ways than one, and this is what smart Australian entrepreneurs should be aiming for.
Reaching international customers with dropshipping is not difficult thanks to the leverage provided by e-commerce platforms such as Shopify and PayPal, which add currency exchange and payment processing systems that can be easily added to online shopping carts and websites. If adding enhancements to a website represents a bit of a coding challenge, entrepreneurs in Australia should not have a problem finding freelance IT experts who can take care of such things on a per-job basis.
Dropshipping is not limited to the business-to-consumer (B2C) market. Some of the most successful entrepreneurs in the history of dropshipping have focused solely on selling goods to other companies; this is known as the business-to-business (B2B) market. Australia is a good country for dropshippers who want to tap into the lucrative B2B market due to the abundance of small businesses and startups currently operating in the country.
There is also a cultural advantage that Australians can find in their own market: this is a country that has become extremely consumer-oriented in the last few years. People actually enjoy shopping online, and they are likely to respond positively to the concept of dropshipping should they realise that is how their goods are being delivered. This is not the case all over the world; in Nordic countries, for example, shoppers demand that their retailers should always keep plenty of goods in stock. Sweden and Denmark are two of the very few nations where the national retail business models do not favour dropshipping.
In the end, 2017 will probably be the year when dropshipping takes Australia by storm and becomes a viable business model for savvy entrepreneurs. It is worth mentioning that there are no boundaries in the dropshipping, wholesaling and e-commerce sectors; business owners who are creative and willing to take chances are the ones who will reap major profits.
What the Australian business sphere needs to realise about dropshipping is that it can be very lucrative for those who really apply themselves to their business. As widespread as dropshipping is in the United States, for example, most people who approach it as a hobby will not earn too much money for their troubles. Anyone who reads the various dropshipping articles published by U.S. news outlets in 2016 will realise that those who have made a couple of million dollars in just a few years are dedicated entrepreneurs who were not disheartened when they started and were making only a few hundred each month. They persevered by securing more websites, learning more about e-commerce, reinvesting their profits to expand their marketing campaigns, and doing more to grow their operations.
In Australia, dropshipping is still a novel concept, which means that competition is lower and the likelihood of success will be greater; however, this success will prove elusive to those who do not put in the required effort.