January 11, 2023
Hold inventory for dropshipping clients
And listen — I'm not a big fan of it. But, whether or not I like it, there are tens of thousands of people doing it. And they all face the same problems. So there are opportunities in this space.
For those of you who aren't familiar — dropshipping is where you sell something you don't own or produce. Let's say a watch.
You make a nice online store, buy ads, and sell watches.
Except you don't own any watches. So, when someone buys one, you go on Aliexpress (or some other Chinese factory website) and buy a watch. And instead of your own address, you put in your customer's.
But there's a fundamental flaw that plagues dropshippers.
Unless you're buying from a US factory, your customers are going to have to deal with weeks of waiting before receiving their product. This leads to high rates of return, chargebacks, poor reviews, and low repeat purchase rates.
Currently, there are only 2 solutions:
So here's the idea.
Basically hold inventory for these businesses.
There are only about 500 products that all dropshippers choose from. Sometimes new ones emerge, but it's not like there are millions of different options.
So, if you get enough funding, you can solve the fundamental problem of dropshipping fairly easily.
Here's how it would work.
You function as a 3PL. You have a large warehouse.
Let's say a new product (for example, a watch) starts selling on lots of stores (you can measure this by talking with factories in China or through customer requests).
You would talk with factories in China and buy 1,000 units (or whatever). You'd get a hefty volume discount.
Then, your clients can put this product on their site. Any time they sell one, rather than going directly through the factory, they contact you. And you take one from your inventory, bill their account, and ship it out.
This would cost the client almost nothing — by buying and shipping in bulk, your landed item cost is significantly less than it would be for them buying one at a time. So you can just charge them the same price that they would normally pay the factory.
But, they get tons of benefits.