Dropshipping has surely become a catchword in the e-commerce market.
Oh, but firstly, those who have a little-to-none idea about dropshipping, here is a brief explanation:
Dropshipping is the method of supply chain or retail shipment method in which the store doesn’t carry the stock. Instead, the store purchases the stock from the third party and ships the items directly to the customer.
Before starting, here is Pop Quiz for all emerging entrepreneur who are considering entering the business of dropshipping.
How many of you consider these myths about dropshipping?
- I need to register my business for dropshipping.
- I will have to pay tariff and duties on my Import.
- I need to learn coding or a programming team to setup my dropship store.
- USA China trade war will affect the dropshipping business.
- I will require cheap goods to earn profit.
- I have limited platform to sell on.
- Wayfair vs. South Dakota case will kill dropshipping business.
Are you troubled by these facts? Well Good news, all of the aforementioned factors are nothing but Myths of dropshipping.
Here is a detailed explanation of each of the 7 myths you believe are true about dropshipping that are actually not!
1: I need to Register My Business for Dropshipping
Many people quit before opening their dropshipping store by thinking that they need a proper registered business or company for their store.
You don’t need to do anything to start your dropship store, as a matter of fact, you can start it right now in a matter of minutes without registering anything. You can set up your business without registration or any licensed as a ‘sole proprietor’.
But, you are bound to pay your taxes as per the rules of local laws that will come later and has nothing to do with your business creation.
Watch the video: How to start a dropship business?
2: I will have to Pay Tariffs and Duties on My Import
FYI – Tariffs and duties are the payment that any country charges on the import.
The question here is, who will have to pay those tariffs on the import – you? The answer is No!
The duties charged on the person whose address and name mention on the order – that is your customer. But even for your customer, it is unlikely that they will have to pay these duties as most of the countries have a very high threshold on the value of the product.
For Example, in the USA the threshold for import is $800, which is the far beyond the average amount of any customer who orders online.
Yet, on a safe side, make sure to keep a check on the threshold of different countries to keep your customer away from import duties.
For Example, in Canada, I was reluctant to import anything, as the threshold is just about $20 CAN.
Therefore, make yourself familiar with the import threshold of every country as it is significant for your business.
3: I Need to Learn Coding or Programming Team to Setup My Store
Familiarity with programming knowledge will definitely give you an edge to run a website. Well in this case there are many platform that offer comprehensive and progressive tools that help you to open your online store without getting into any technicalities of coding.
These platforms made it much easier to design the website that goes best for your business. Many dropshippers offers step by step guide on how to download product on the store.
One of the best platform that I highly recommended is the Neil Patel blogs related to ecommerce.
Must go through the blog of his channel titled as; How to Setup Your Ecommerce Store. It is a complete guide for everyone to create the online store regardless of having any technical knowledge.
Although a thorough research on ecommerce and online shopping is recommended before starting your dropshipping store.
4: USA China Trade War will Affect My Dropshipping Business
It is not a hidden fact that USA and China are having trade war. Since Donald Trump has signed a MoU to increased tariffs on Chinese imports, it has become a concern for dropshippers. So far, white house has not passed the bill yet.
Well, let’s imagine the bill does pass, still there is no matter to worry about droppshipping business. As I have mentioned earlier in point 2 the threshold for importing goods in USA ($800) is still intact and so far no there is no focus on lowering this threshold. So relax!
5: I will Required Cheap Goods to Earn Profit
The major reason that dropshipping become a preferred choice for entrepreneurs is to sell innovative and top-notch items from different parts of the globe.
In today’s ecommerce market, all you need is to sell special products to your potential customer. For that, try to target a specific market and offer them exciting products and outclass customer service. To get ideas for your dropship product check out the list here.
6: I have Limited Platform for Dropshipping
This is a common myth in this business that dropshipping can only work on major ecommerce store such as eBay, Amazon and AliExpress.
Dropshippers are making hundreds of thousands of dollars from several other ecommerce platforms. Also you can create and design your own online retail store on platforms like Shopify, Wix or Woocommerce.
7: South Dakota vs Wayfair will Decline Dropship Business
This significant dropshipping case happened in June 2018. For those who are unaware, here are some highlights:
Can a state (South Dakota) charge tax on purchases made from the seller outside of state, even if the seller does not live in the taxing state.
Previous law stated that if you sell in a state, you would need to pay sales tax on your sales only if you have physical presence in that state.
In 2016, South Dakota decided to change that law. The new law stated that all the online retailer who crosses the sales of $100,000 or completed 200 and more transactions are bound to pay tax.
A furniture store, Wayfair, seemed to be affected by this changing law and took South Dakota to Supreme Court. Eventually, South Dakota won the case that means online retailer had to pay taxes even if they are out of state seller.
Read the full case here.
Many people are curious that it will affect heavily on the dropship business. Here are some fact I’d like to highlights,
Firstly the law has changed only in one state no changes has made on the other state laws. That means your major viewer and customer will remain intact with this changing in law.
Secondly, the threshold ($100,000) is very high; the decision is made to collect taxes from large online retailer. Small retailers and dropshipper will remain unaffected with the updated law.
In this post, we tried our best to debunk all the myths that you believed about dropshipping.
We hope that this would definitely help you to get clear from all the doubt and fallacies about this business.
So get yourself some time and start setting up your ecommerce business and experience some real facts about this market.
All the best!