Revenue Through Dropshipping Business
Drop shipping provides numerous opportunities for young entrepreneurs to earn a steady stream of revenue. Drop shipping business requires minimal investment. The drop shipping business model enables the entrepreneurs to establish an online/store business. The products are sold to the consumers after being purchased from a third party. The products thus purchased are then shipped directly to the consumer. This business model encourages the increased involvement of people in entrepreneurship. The product that is being sold is not directly handled by the seller.
Advantages of Drop shipping Business
Another advantage of drop shipping is that entrepreneurs can sell their products to consumers without stocking the products in an inventory. In a standard retail model, the seller owns an inventory. Thus, the entrepreneur can channel his focus solely on merchandising and promotion of the products.
In this model, entrepreneurs are not required to invest in an inventory, for storing the products that are to be sold. Thus, drop shipping is an economically viable and efficient business model. This business model enables entrepreneurs to link buyers with their on-demand products. A wide range of millions of products belonging to different categories could be sold by adapting a drop shipping business model.
One of the biggest advantages of this business model is the minimal investment of capital. The seller does not have to make the payment for the product until the customer has brought the product. Minimal investment for setting up the business means that there is less risk for the entrepreneur. It is not restricted by the physical location of the seller, provided that the seller has access to a good internet connection. The seller could communicate with the customers and the suppliers through the internet regardless of their physical location. However, a small amount of investment is essential, to cover minor expenses such as web hosting and suppliers.
Three commonly followed business structures in the drop shipping model are Sole proprietorship, Limited Liability Company (LLC), and C Corporation. In a sole proprietorship business structure, personal liability protection is not available. However, requirements for filing are minimal. Increased protection of your assets is provided in the LLC business structure. Here the business is established as a separate legal entity. C corporation is the business model that offers the most liability protection. This business model allows us to attain autonomy from personal costs and finances.
Employer Identification Number
An Employer Identification Number (EIN), is mandatorily required for all businesses, as declared by the IRS. An Employer Identification Number is easy to secure. Any business entity can get their Employer Identification Number free of cost by applying for it online.
Shopify is a very popular drop shipping business platform to begin the business. If you do not have any previous experience in drop shipping business, it is highly recommended to begin your venture with a minimum number of products. It is also recommended to buy your products from a single reliable supplier. Thus, you could gradually expand your business, increasing the number of products.