There is no doubt that the ongoing COVID-19 pandemic has encouraged nearly everyone across the globe to embrace the great indoors. And this simply implies that the urge to generate some passive income online from the comfort and safety of our homes is on the rise.
And while there are potentially endless ways to make money online, reverse dropshipping has arguably become the most popular way to trade and earn some significant money online. And if you are an online trading enthusiast, the chances are high that you have heard something about reverse dropshipping.
But what is the reverse dropshipping meaning? This article will help you to understand everything you need to know regarding reverse dropshipping. So, peruse the article, and let’s get started.
Understanding Reverse Dropshipping
To help you understand this relatively new business model, let us first explain the meaning of drop shipping. Simply put, dropshipping refers to a web-based business model that allows you, as a seller, to sell items without an obligation to either stock or ship those products on your own.
You don’t need to import products yourself either. Your only role is to list products from your dropshipping supplier on your own dropship site, or global online marketplaces such as Amazon and find the right audience for it. Many ask if dropshipping is dead, and the truth is it is not – and never will be.
Reverse dropshipping is quite the opposite of this model, and involves online sellers procuring top-notch products for clients whose countries usually own mass-production sites, including China and perhaps Indonesia.
It is imperative to note that items traded through reverse dropshipping are mainly manufactured in the United Kingdom, America, or any other country that normally outsources their mass production to China or other Asian nations.
At this point, you must be wondering why China, an industry giant, has become a reverse dropshipping sellers’ hotspot! The logical explanation is that a significant number of Chinese consumers are always looking for high-quality products, but unfortunately, the prospect of finding those products inside their own country is usually a daunting task.
The result of China’s mass-production levels is somewhat lower quality for many domestically-produced products. As a result, Chinese consumers, particularly the rich ones, must find alternative ways to purchase products that would somehow satisfy their extravagant tastes.
Reverse dropshipping simply involves the buying of high-quality products usually manufactured in the West and subsequently selling them to wealthy, particularly Asian clients via your online store.
What Is the Difference Between a Reverse Dropshipping Business and Conventional Dropshipping?
As a business model, reverse dropshipping is nearly similar to traditional dropshipping, with one notable difference.
As opposed to buying lots of low-quality products that are highly affordable, reverse dropshipping involves procuring high-quality products for your online dropshipping store.
Remember that this model is also different from high-ticket dropshipping. High ticket dropshipping still focuses on the western markets, so it’s not a reverse strategy at all.
How Does the Dropshipping Business Model Work?
As already explained, this drop shipping model involves selling high quality goods from western countries to wealthy customers in China.
As an owner of a dropshipping business, you will need to collaborate with domestic suppliers, who will be responsible for producing and keeping products, packaging them, and shipping products to your clients. You will hold virtually no inventory yourself.
On the other hand, if you own a website, you will only have to create a gallery of the products, set your preferred price for those products, and manage your inventory. You will not only need to advertise those products on your own but will also have to find customers. You can host your site on many of the major ecommerce platforms out there.
For instance, you can select an item from let’s say, Amazon, and then set a reasonable price that will practically cover the marketing as well as dropshipping supplier’s item price, and earn you some profit. If an item you choose costs $50 on Amazon when bought wholesale, you can decide to advertise the same product on your online store for $80.
The Chinese wealthy customer will order the product from your website and subsequently pay you the $80. You will then send the order to the producer while paying the wholesale price, as you keep the rest as your earned profit. Not a bad profit margin.
What are the Pros of Reverse Dropshipping?
While reverse dropshipping remains relatively new, it has gained lots of popularity thanks to the numerous benefits it guarantees, including:
- Attractive return policies: One major benefit of reverse drop shipping is that you will collaborate with suppliers who offer attractive return policies. Bearing in mind that return policies are usually a major concern for most Chinese suppliers, the prospect of working with a reputable supplier who provides a good refund policy can be a huge benefit. It is worth noting that a significant number of American, as well as European dropshipping suppliers, usually offer amazing return policies to make the whole process of returning unwanted goods somewhat easier and less hectic for their clients.
- A huge customer base: With a whopping population of more than 1.4 billion, China remains the most populous country on the globe! And thanks to reverse dropshipping, you will be able to make this huge market your target. What’s more, recent research tends to show that eCommerce sales in the Chinese market are booming, and this only implies that you will be able to generate considerable profit margins depending on your efforts.
- Less competition: Currently, there are not many traders or businesses doing reverse dropshipping. It only means that if you use a reverse dropshipping model to create a hitch-free export-import trading experience, you will ultimately stand out from the crowd and rip big in the long term.
- Easy diversification: It is also worth noting that it allows you to effortlessly diversify the goods you offer, saving you from the risky market fluctuations in certain products.
- Relatively affordable: You will be trading high-quality goods in small quantities in a high-demand market, which almost guarantees huge profit margins. What’s more, you will need very little to no start-up capital as you only need to equip yourself with a computer and internet connection and you are good to go!
The Cons:
First and foremost, it is imperative to note that there are no significant drawbacks of reverse dropshipping! Perhaps the notable disadvantage is that you will have to deal with the high pricing competition in the target market.
I could also say that you will have to contend with the fairly longer order fulfillment periods. The last hurdle is perhaps the language barrier, bearing in mind that most customers in the Chinese market don’t speak English.
To be successful, your product labels should be written in the Chinese language! It might also help if you speak Chinese, but hey that’s what Google Translate is for!
Is There Reverse Dropship Training Available?
I couldn’t find anything that I would recommend to my readers as this is really a rather new concept. However, if you understand the in’s and out’s of the conventional dropshipping model, then you should easily transfer that knowledge over to this new concept.
If you’re new, you should consider my recommended dropship training courses.
Conclusion: Should you Consider Reverse Dropshipping?
Now that you understand all the basics of this good business model, as well as the potential benefits and associated drawbacks, you can confidently decide whether you should consider investing in it. Generally, reverse drop shipping is a highly attractive way to generate some passive income online if done appropriately.
A number of wealthy Chinese customers are always looking for high-end goods and the demand for these products will never decrease. So, if you are a dedicated professional who understands and speaks Chinese, reverse dropshipping is definitely an attractive business model that suits you!
Even if you don’t speak the language, there are always ways around it. Remember that your business is online and you won’t need to speak to anyone on the phone. Your support can be done through emails and you can use Google Translate for that. Remember on the flip-side, a lot of vendors from China use this tactic when speaking with their English customers.
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