Reverse Dropshipping: What It Is and Is It for you?
- What’s reverse dropshipping?
- How does reverse dropshipping work?
- Why choose reverse dropshipping?
- What to keep an eye on when working with reverse dropshipping?
- In a nutshell
Robin Ryan once said, “You’ll never know what you can achieve until you try it.” This quote is especially relevant in the business world, where people need to be bold and often take numerous risks in order to be awarded a favorable outcome. In the eCommerce industry, many will find this saying quite true as it highlights the fact that business is all about taking chances, particularly when starting off with online sales and aiming toward opening a dropshipping store, for example.
Although dropshipping has a lot to offer, including low investment, automated features such as regular inventory updates and order placements, flexible working schedule, great scalability, and a storage-free store, it does come with its own challenges. Nevertheless, they aren’t something that can’t be surpassed. By staying on track with your business plan and focusing on implementing the necessary improvements, you’ll quickly see that dropshipping is worth it. Thus, you’ll still be able to run a virtual store, such as an online clothing boutique, for instance, smoothly and efficiently and earn a decent dropshipping income. You can further learn about the benefits of running such a business in this dropshipping case study.
However, in this article, we won’t be getting into further details regarding the operations the dropshipping business entails. Instead, we’ll concentrate on explaining a type of dropshipping model that has also been favored in the eCommerce world, known as reverse dropshipping. Although it functions almost completely the same as a regular dropshipping business, reverse dropshipping has a few of its own characteristics that make it unique and different.
In the following paragraphs, we’ll give you an elaborated definition of this model and expose the secret behind its functioning. Furthermore, we’ll take a look at the reasons why you should give it a try and the things you need to keep in mind before getting your reverse dropshipping store off the ground.
What’s reverse dropshipping?
The traditional dropshipping business model calls for launching an online store and stocking it up with virtual products provided by your supplier which are later sold to your customers. This often involves working with Chinese suppliers as they offer cheap items which can be offered to consumers for much bigger prices.
Reverse dropshipping, on the other hand, entails dropshipping high-quality products made in Europe and the US which are then sold to customers from China or other Asian countries. Reverse dropshippers are specifically targeting these audiences for the reason that these customers don’t come across frequent opportunities to buy well-made products that’ll last longer than only a few months. Not all Asian shoppers are fans of low-cost low-quality merchandise. Knowing how poorly manufactured local products can be, they opt for spending more in order to get their hands on superior items that’ll serve them for an extended period of time.
Despite showing a great desire to purchase durable products, Asian consumers are also quite active online buyers. This can be proved by a research carried out by Statista according to which the Asian eCommerce market is expected to reach over 3 million users by 2025. In addition, this market is also currently valued to have a revenue of 2 billion USD which is expected to keep on growing by almost 8% in the next years.
How does reverse dropshipping work?
A reverse dropshipping store functions exactly like any regular dropshipping business. You start off with finding the right supplier capable of providing you with the products you wish to sell, in this case, first-class items such as luxury apparel clothing, for instance. Once a deal has been put into place, you can go on to launch your online store by using website-building platforms such as Shopify and WooCommerce.
Once your store has been set, it’s time to insert your products. With automated dropshipping, nowadays things are much more simplified. Suppliers usually offer plugin integrations, allowing dropshippers to enjoy real-time inventory synchronization, freeing them from the burden of having to upgrade new product arrivals on their own. Customers put an order in your store which is forwarded to your supplier who then takes over the delivery process and ships the products to the end-users.
The only noticeable difference is, as specified before, the product niche. Since you’ll be selling merchandise of much greater quality, with reverse dropshipping you’ll have to dedicate time to conduct more thorough market research. In that way, you’ll be certain to find the product categories Asian customers demand the most.
Why choose reverse dropshipping?
You can target a large market
Being the home of almost 60% of the total world population, the number of Asia’s inhabitants has surpassed well over 4 billion people, making the continent the most heavily populated place on our planet. Out of all countries located in Asia along with the Pacific states in that region, China holds the title of the nation with the most citizens, a number which is equivalent to close to 20% of the global population.
Having this in mind, with reverse dropshipping you’d be able to target a huge audience of shoppers interested in buying products of impeccable quality, something that is often hard to find both in China and the surrounding Asian states. Additionally, with online shopping becoming the new normal, your dropshipping store has great odds of generating good profits.
As previously mentioned, the eCommerce industry in Asia is experiencing an outstanding boom in online sales and purchases, making reverse dropshipping a great idea for a business. But out of all Asian countries, China’s eCommerce market is considered to be the largest. As claimed by Statista, as of 2022, the eCommerce sales detected in China have reached over 1 billion USD in revenue, predicted to hit more than 1.6 billion USD by 2025. In the following graph illustration provided by GlobalData, you can observe the progress of China’s eCommerce industry, starting from 2017 and going all the way to the future:
Taking all of these facts into account, reverse dropshipping in Asia, and especially in China, will give you the opportunity to sell your merchandise to a large number of customers, exposing your store to an exceptionally big international market.
You can earn high margins
Because they’re considered to have greater value, well-made products often offer dropshippers the chance to establish higher profit margins in comparison to those earned through selling second-rate items. In other words, as a result of their exquisite quality, these products are given by customers much greater appreciation, leading to a significant increase in their worth. Consequently, their prices start escalating as well.
One of the best niches for this dropshipping model which can help you achieve these high dropshipping profit margins is no other than the sale of luxury items, especially high-end clothing. Since luxury apparel is known for its excellent tailored fashion pieces made from only the best of materials, customers from China and the rest of Asia are certain to be interested in owning a few clothing items that are designed to last. Moreover, having reached a revenue of 81 billion USD in 2022, the luxury apparel segment can bring substantial earnings to your reverse dropshipping business, offering your store to experience notable scalability.
You can avoid market saturation
If you’re interested in giving dropshipping a go but are feeling underprepared to deal with the competition, the reverse dropshipping business might be the solution to your problem. When running a traditional dropshipping store, the competition is known to become fierce, which may take dropshippers some time until they find their way around their competitors. By putting in place smart actions and innovative tactics, this too can be conquered, with your online store outshining its rivals.
However, in case you still prefer to start out working in a less crowded market, then what better way to do so than by giving the reverse dropshipping model a chance. Since this type of dropshipping is still relatively new to the eCommerce industry, you’d be handling a lot fewer contenders. That being the case, you’d be able to focus more on growing your store, developing your marketing ideas, and finding ways to attract Asian customers.
What to keep an eye on when working with reverse dropshipping?
Carefully choose your niche
Since with reverse dropshipping you’ll be selling high-quality merchandise, it’s important to take some time to carefully select your niche as not all of these types of products can bring you the same level of profitability. As mentioned previously, high-end clothing is a great market to work with not only because it offers exceptionally designed apparel pieces that are rare to find on Asian sole, but also because Asian customers, especially the Chinese ones seem to prefer shopping from luxury fashion brands over regular brands any day in the week.
As reported by MartinRoll business magazine, Chinese consumers appear to cover almost 50% of the global luxury shopping. This can also be proved by an analysis provided by Statista, according to which China is the leader in generating revenue from high-end products, followed by Japan and South Korea.
As once again stated by MartinRoll magazine, the Chinese customers’ frequent spending habits on luxury apparel are ascribed not only to China’s wealthy citizens but also to the country’s growing middle-class whose incomes seem to vary between 2,600 and 3,900 USD. These salaries have been allowing more Chinese consumers to purchase high-end clothing and jewelry from some of the world’s most prestigious fashion houses.
If you decide to choose luxury fashion goods as your niche for your reverse dropshipping store, when working with supplier BrandsGateway, you’ll be able to successfully tackle the Chinese luxury apparel market. With 15.000 products to choose from and worldwide shipping available to over 170 countries including China, BrandsGateway can make your business thrive in no time. Here are some of the items this dropshipping supplier can offer for your store:
- Dolce & Gabbana dresses
- Gucci accessories
- Michael Kors bags
- Jimmy Choo shoes
- Swarovski glasses
- Gant watches
Rearrange your marketing strategies
Another thing you need to keep in mind before starting with the reverse dropshipping model is the fact that in order for your store to receive great publicity, you’ll have to implement completely different advertising tactics compared to those used in the US or Europe, for instance. With large social media networks such as Google, Facebook, Instagram, Twitter, and YouTube being banned for use in China with the exception of Hong Kong and Macau, you might find yourself limited in your marketing strategies.
Nevertheless, nothing is lost as most of the other Asian countries still allow their inhabitants to use these apps. Even when it comes to China there’s no need to panic as the nation happens to have its own popular search engine known as Baidu which you can use to easily target customers. By optimizing your store for this platform, you’re bound to be effective in your marketing plans.
In a nutshell
By taking account of everything discussed above, reverse dropshipping is worth giving a shot, especially if you’re planning on selling high-quality products. This business model enables you to reach a large audience, gives you an opportunity to work with high margins, and allows you to keep away from the competitive traditional dropshipping market. Furthermore, by picking out a lucrative niche and concentrating on developing marketing strategies that are specific for targeting Asian consumers, your reverse dropshipping store will benefit from high chances of success.
About the Author
Proud bookworm, passionate content writer and devoted Arctic Monkeys fan. Always in the mood for travel and sightseeing.