Dropshipping – the process of taking customer orders online, and then sending the orders to a manufacturer for fulfillment – can be a full-time job. Dropshippers essentially provide the retail and customer services that many product manufacturers choose not to provide. Any product that can be ordered online can be dropshipped, though many dropshippers will focus on a particular niche. Dropshippers have an advantage over other retailers in that they do not warehouse any products. They simply facilitate the purchase. In order to be successful in the business of dropshipping, you must plan, prepare, and invest in your business so that the enterprise can succeed in the long term.
Successful dropshippers should consider the political, economic, social, technological, environmental, and legal issues that stem from their industry. They should also examine the critical success factors and cost-drivers that impact the amount of revenue required to maintain the business. As the enterprise is conducted almost entirely on the internet, a solid e-commerce platform, with reliable information technology support, is essential to meet customer expectations. Dropshippers also need to contract with wholesalers or other vendors, which will require a credit account to facilitate payments. Depending on the product sold, full-time dropshippers typically will have at least one full-time, customer care assistant to help with tasks, including fulfilling orders and interacting with vendors.
The tables below depict the common issues and costs associated with providing childcare.
| Political | Taxes in different locations | |
| Labor laws – ensuring that staff is eligible to work in the US. Maintaining a safe work environment and compensating legally | ||
| Economic | Varies by product dropshipped | |
| Expensive items affected by economic downturns and can be cyclical | ||
| Social | Varies by product dropshipped | |
| Technological | ecommerce store plus support | |
| advertising online | ||
| using social media | ||
| Environmental | Being aware of unsafe products, especially if imported | |
| Legal | Pricing rules and contracts from each manufacturer | |
| Liabilities for manufacturer issues | ||
| Being aware of illegal products, especially if imported | ||
| Critical Success Factors | Agreements with manufacturers to become one of their dropshippers – usually involve setting up an account with a credit card | |
| A functional webstore | ||
| Major Activities | Associated Costs | Cost Driver |
| Fulfilling orders | Order tracking system | Volume of orders, types and numbers of orders/producers (varies by platform and dropshipper) |
| Providing customer service | Customer support salaries | Number of customer service staff |
| Supervising staff | Manager salaries | Number of managers |
| Maintaining ecommerce website | Tech support | Number of SKUs |
| Projected Expenses | |
| Employee Costs including benefits | Year One Cost per month |
| Owner | $ 3,500 |
| Book Keeper – Outsourced | $ 800 |
| Legal – Outsourced | $ 800 |
| Tech Support – Outsourced | $ 400 |
| Customer Care Assistant (full time) | $ 2,400 |
| Wages Subtotal | $ 7,900 |
| Taxes, Fees | $ 1,185 |
| Subtotal | $ 9,085 |
| Office/Facility | |
| Facility Expense (deductible part of home) | $ 500 |
| Gas/Electric | $ 200 |
| Water | $ 100 |
| Internet/Telephone | $ 100 |
| Office supplies | $ 100 |
| Property Insurance | $ 208 |
| Maintenance | $ 250 |
| Computers and Hardware | $ 250 |
| Subtotal | $ 1,708 |
| Marketing Costs | |
| Web site hosting and advertising | $ 800 |
| Web site updates | $ 100 |
| Business Cards, Pens, Swag | $ 50 |
| Subtotal | $ 950 |
| Projected Monthly Costs | $ 11,743 |