A new E-Commerce strategy : The drop shipping
SIAM Shipping is a dedicated shipping company based in Bangkok, Thailand. If you need any drop shipping service supplier in Thailand, we will be able to handle this step from the contact of your supplier until the shipment at your customer’s door. You wanna grow your business internationally? Contact us and get further information about our services.
Establishing a drop shipping business in Thailand: Top 4 downsides
The downsides of establishing a drop shipping business in Thailand
Many people are willing to set up in Thailand to launch a dropshipping business, becoming what we call a “Digital Nomad”.
The idea of working at the edge of the most beautiful white sand beaches in the world, enjoying the flavor of a nice cocktail while getting money working on your laptop seems pretty appealing. This is what people come and look for when starting this kind of activity in Thailand.
It’s not that simple. It’s not that easy. You will have to face many challenges that nobody seems to bear in mind. A lot of expats set up in the Northern part of the country, in Chiang Mai, to build this kind of business. Before you leave your country and enjoy a new businessman lifestyle in a paradisiac country, please stick with me and wait for what is coming.
Here are 4 main problems that you will necessarily have to overcome when setting up your online business there
Problem 1: Time Difference
The time difference is not always easy to handle. If you’re from Europe, there will be a huge time difference (6 hours-7 hours), that will impact your business. If you are sending your products mainly to Europe and want to work during business hours, then you will end up working quite late here in Thailand. Let’s say it is all about adaptation. You have to adopt a new rhythm, if you want to be able to make phone calls, answer the phone and exchange emails during business hours.
SIAM Advice : This is especially important in the first stage, when you are still trying to establish a decent working relationship with your suppliers.
If you want to build an American, a French or an Italian store in Thailand, then you will be sleeping the whole morning. If you want to build an Australian business, then you will have to wake up very early. It depends on the countries you are working with, but this is not always easy to handle.
Problem 2: You Can’t Meet Suppliers In Person
Most of suppliers can be signed on over the phone, or through an exchange of emails. But the best option in business will always remain face-to-face meetings. When visiting people in person, it is way easier to build strong business relationship, create trust… It can be a little bit trickier to do so only by phone/emails.
SIAM Note : After experiencing your first months as a digital nomad, you will probably have the feeling you could be more efficient by meeting people in person.
This is something to bear in mind: it is not impossible to do business 100% online, but it makes it harder on the long term though.
Problem 3: You Can’t Meet With An Accountant or Lawyer
If you want some professional advice from a lawyer or accountant about how to set up and structure your company, it can be a little difficult to do so from Thailand.
When starting a business, it is always useful to be able to receive professional advices from lawyers or accountants. This is not ideal in Thailand. As an example, the business culture in the USA makes it really easy to benefit from this kind of services when launching your activity.
SIAM Remark : In Thailand, you may find it difficult.
It’s a pity, because it is always a good idea to get decent information and advices from accountants, lawyers and advisors to make sure you are following the right path.
Problem 4: You Might Not Be So Productive…
If I say Thailand, what comes to your mind? Beaches, beautiful ladies, crazy nights out, sun, travels, etc.
This is exactly what can become a big problem for your business. It depends a lot on your personality, and where you are staying in Bangkok.
SIAM Example : In Chiang Mai, or Bangkok, you will find a lot of people who launched a dropshipping activity and are serious enough to stick with it. But if you decide to set up in the islands such as Koh Samui, Koh Phangan, you might have some troubles to stay focused on your objective. These islands come with a lot of distractions, parties, that may be too distracting for you. You will have an amazing time, but depending on your personality, this might have a bad impact on your productivity.
That’s all folks. Here are the main downsides you will have to overcome. But obviously, there are also plenty of pros that you can imagine by yourself. Before deciding whether to fly to Thailand or not, you should counterbalance the pros and cons and see if you are 100% sure about what you are expecting from this upcoming experience.
Here you will find a summary which will answer the following question:
Should I implement a drop shipping process in my business model ?
What are advantages and inconvenients of the Drop Shipping ?
A company involved in e-commerce must take into account a number of factors related to the implementation – the shipment arrangements, where goods will be stored and the most competitive and least items.
The concept of Drop Shipping is actually using the process of sending deliveries from suppliers to your business and having the item delivered directly to the end customer. This process removes the unnecessary step of taking a shipment to easy ship it again. This concept saves money compared to postage and removes any concerns about storage space for small e-commerce sites. But despite the fact that the drop shipping is advantageous on several aspects, it’s not the ideal process for you …
Advantages of fall delivery
Start-up costs are smaller
To create an online business, it is necessary to have a good capital in order to purchase your inventory of products. It is a project that requires a lot of work because there is no clue about the amount of stock you are going to sell for a month or a year.
SIAM Note : Drop shipping allows you to avoid this kind of problem as it will avoid the chance of loosing your money on an pending stock.
You can offer items almost instantly
Most of the time, when a retailer begins to sell a product, he has to wait until all his stocks have been shipped to start publishing them on his site. After all, why putting an item on sale if you don’t even have it in stock? Using drop shipping is convenient because once you decide to put a specific model on your e-shop, you can start promoting it almost directly.
You can offer a high range of products
The fact that a company can aspire to have the opportunity to offer an increasingly wide range of products is something very sought after and with drop shipping, it’s now possible. Don’t worry about the different colors or sizes of your products and where they will be stored, simplify the task by listing them on your site and your supplier will take care of the rest.
Testing new products without risk
It will always have a risk of non-selling in the background when you add new products to your range. It’s very tricky thing for your business to imagine and guess what your customers want to buy, being able to test before and without making any real investment will always remain an advantage.
Time saving is key
Organizing your stocks and preparing products to be delivered can be a real ordeal. This is why we recommend the use of a third party who can ship your items by saving handling, labeling, packaging, shipping, etc. With this, you can focus more on growing your business in its various sectors.
Disadvantages of drop shipping
Processing your orders can become difficult
There are so much E-Commerce that choose the drop shipping as a real strategy by working with several wholesalers, knowing that each wholesaler has special requirements in relation to order deal with, invoicing and sending. Those steps could make your activities very difficult. The gap between sales and obtaining this product after shipping can take longer and longer because many conversations and actions will take place before the product is expelled.
Not having all the information about the product is problematic
The fact is that you do not have a really realistic idea of the products you are selling since you do not really handle them. The manufacturer does not necessarily give an adequate description of the product so you can not answer customers’ questions about the dimensions, weight, ease of use of the products, without passing on these questions to suppliers.
SIAM Advance : Lack of information is not a good thing for a company because it will leave apparent gaps on your E-Shop and an empty or wrong information can make you lose a customer.
You do not know the opportunity of a model until a customer purchase it, but what happens if you discover that it is out of stock? This can be irritating for a customer to know that he bought a product, when in reality he did not buy anything at all. An automated system that can update the availability of your stocks during the day to eliminate this problem. If the stock is exhausted, you can always contact your supplier by mail or telephone.
Customer service problems
Drop Shipping removes much of the customer experience under your control as well as responsibility for shipping. The problem is that it is impossible for a logistics company to ensure that a product has arrived in the same state it was supposed to be and on time.
SIAM Remark : If a customer complains or simply wants to inquire, the resolution process is slowed because either you do not have the necessary information, or the query or complaint must go through the third party provider before you can resolve it.
Competition is everywhere
Great competition is everywhere and finding good drop shipping means that generally there will be competition with other suppliers in your industry. Many manufacturers invoice their realization service so product margins can be low, so you have a little room to maneuver to keep your products priced while beating your competitors. The choice of drop shipping should not be made without consideration given the potential benefits and problems this may cause.
SIAM Warning : planning and implementation of contacts between vendor and vendor can help you solve problems you may encounter. By careful and thoughtful consideration, these disadvantages can be avoided.
If you are in the midst of preparing for whatever is planning your ecommerce business we can give you some tips for designing your website and also for all that is online marketing via social media. Do not hesitate to contact us to discover how we support your company…
What is drop shipping?
Drop shipping definition: it is a model that will allow you to buy products or merchandise individually at a wholesaler and to send it directly to your customers.
You no longer have to buy large quantities of products. You simply choose with suppliers the goods to sell. It is only after you receive an order for completion that the supplier will ship the product. It will pass from its warehouse to the place desired by the customer.
Less capital is required – Probably the biggest advantage is that it is possible to start an e-commerce store without having to invest thousands of euros in stock in advance. Traditionally, retailers have enormous amounts of inventory purchasing capital.
With the drop shipping model, you do not have to buy a product unless you have already made the sale and been paid by the customer. Without major inventory investments, it is possible to start a successful shipping drop business with very little money.
Easy to Start
Running an e-Commerce business is much easier. You do not have to deal with physical products. With drop shipping, you do not have to worry about:
- Manage or pay for a warehouse
- Pack and ship your orders
- Inventory tracking for accounting reasons
- Management of incoming returns and shipments
- Continuous product ordering and inventory level management
Because you do not have to deal with inventory purchase or warehouse management, your overhead is quite low. In fact, many successful drop drop businesses are run from a home office with a laptop for less than 100 euros per month. As you increase, these expenditures are likely to increase, and they are still small compared to traditional brick and mortar businesses.
A discount business can be operated from anywhere with an internet connection. If you can connect with suppliers and customers easily, you can run and manage your business.
The biggest difference between the drop and the standard retail model is what the merchant does not stock or have an inventory. Instead, the merchant buys inventory if needed from a third party – usually a wholesaler or a manufacturer – to respond to orders.
Where can I find drop shipping suppliers?
You can use a supplier directory like World Wide Brands or contact suppliers directly and ask them if they drop ship their products.
To find your suppliers you can contact them directly if they file your products or then use directories from suppliers like World Wide Brands.
What are the benefits of drop shipping?
Here is a non exhaustive list of drop shipping strategy advantages:
- Lower capital requirement: you do not have to invest thousands of dollars in inventory with sending by deposit. You will only purchase the product if you have an existing order to complete
- A wider product selection: you can offer a larger number of products to your customers if you do not have to pre-purchase all the items you sell.
- Reduced risk: the risk of an online store launch is reduced if you do not invest thousands of dollars. So you do not stay with thousands of products that you must sell at a loss to limit your money losses.
- Dependence of location: You do not have to worry about fulfillment or running a warehouse, now with your laptop it’s possible to run a drop shipping business from anywhere.
- Evolutive: An expedition is easy to expand because you do not need to manually fill each order.
What are the disadvantages of drop shipping?
- Lower barriers to entry: the competition increases for the delivery because you do not need a capital or a warehouse.
- Lower margins: there is more competition for drop shipping businesses so margins are lower. It’s harder for your business to quickly grow because advertising is too expensive for you and so it’s harder to capture new customers.
Is drop shipping a profitable business model?
You can build good businesses using this model. But today it’s much harder to cope with the competition as a drop shipper. The ecommerce and companies like Amazon are much more competitive. So we have to have a very strong sales proposition. It is very difficult to do this if you sell other people’s products, but otherwise you can do it with drop shipping.
Drop shipping works very well under these conditions. A) you give your product an enormous amount of information and value and b) you benefit from it to sell a lot of access with large margins or c) you use this to complete a catalog with exclusive products.
What kind of profit margins can I expect with drop shipping?
Your margins are very random depending on the product you go to sell. For example for electronics rather expensive your margins will be quite low (5% and 10%). But for accessories at low prices, we arrive at a margin of 100%. An average gross shipping margin of between 10% and 15% should be taken on average.
Where do people sell drop shipped products?
The products sold are shipped all over the world! We find this on websites eBay and Amazon, indeed there are plenty of drop shippers. On e-commerce sites, especially among the smaller ones. Some companies use drop shipping to offer a wider selection of products in their catalog. Large companies, such as Sears and Home Depot, use drop shipping for their less popular products. Thus they will be able to afford a wide selection while limiting the inventory that they have to provide.
You can find many different ways of selling items. But in our opinion the best way to do this is to create its own ecommerce site. Indeed this offers you the best chance of building a scalable enterprise, which will last in time and that will be profitable.
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