The late Robin Ryan once said, “You’ll never know what you can achieve until you try it.” The business world is one where boldness and risk-taking are prized and therefore this quote rings especially true. When starting out in online sales and planning to open a dropshipping store, for example, many people will find this saying to be quite true because it emphasises the importance of taking risks in business.
Dropshipping has many advantages, including low startup costs, automated features like regular inventory updates and order placements, a flexible work schedule, great scalability, and no need for physical inventory storage. However, it is not without its drawbacks. However, they are not invincible and can be outdone. If you stick to your business plan and put in the effort to make the necessary changes, you’ll soon see that dropshipping is worthwhile. This means that you can still earn a living by operating an online store, like an online clothing boutique, without too much difficulty. The advantages of operating a dropshipping business are discussed in greater detail in the following case study.
However, the specifics of running a dropshipping business are beyond the scope of this article. We will instead focus on explaining the concept of reverse dropshipping, a form of dropshipping that has gained popularity in the online retail industry. There are a few distinguishing features that set reverse dropshipping apart from the standard dropshipping model, despite the fact that it operates similarly.
Here, we’ll explain this model in greater detail and reveal how it works. As an added bonus, we’ll discuss the benefits of trying reverse dropshipping and the considerations you should make before launching your store.
How does one define dropshipping in reverse?
The conventional dropshipping business plan involves opening an online store and stocking it with digital products provided by your supplier, which are then sold to customers. For this reason, many companies choose to partner with Chinese suppliers who provide low-cost goods that can be resold to consumers at a profit.
However, reverse dropshipping involves selling high-quality products made in Europe and the United States to customers in China and other parts of Asia. As a result, reverse dropshippers are focusing on reaching these consumers, who don’t have many options for purchasing high-quality goods that won’t break after a few months. It’s not true that every single Asian consumer loves cheap junk. They are aware of the low quality of many locally produced goods and choose to spend more on foreign alternatives that will last much longer.
Asian consumers are avid online shoppers despite a preference for more long-lasting products. Statistics show that by 2025, the eCommerce market in Asia will have grown to include more than 3 million customers. In addition, this market is currently valued at 2 billion USD in revenue, and it is anticipated that this number will grow by almost 8% in the coming years.
I am confused as to how the process of reverse dropshipping works.
A reverse dropshipping shop operates the same as any other dropshipping company would. First, you need to locate a reliable provider who can furnish you with the goods you plan to sell, in this case, premium products like high-end clothing. Shopify and WooCommerce are two website-building platforms that can be used to launch an online store after a deal has been struck.
After you’ve set up shop, it’s time to start adding wares. The introduction of robotic drop shipping has greatly simplified the process. As a rule, suppliers provide plugin integrations that let dropshippers enjoy real-time inventory synchronisation, relieving them of the responsibility of manually upgrading new product arrivals. When customers make purchases from your shop, you send those orders to your supplier, who is responsible for fulfilling those orders and sending the goods to the customers.
As was previously mentioned, the only discernible distinction is the target market. With reverse dropshipping, you’ll be selling products of a much higher quality, so you’ll need to devote more time to market research. That way, you can zero in on the categories of goods that are most in demand amongst Asian consumers.
There are many advantages to using a dropshipper in reverse.
It’s possible to reach a sizable audience
Over 4 billion people now call Asia home, making it the most populous continent on Earth by a wide margin. Asia is home to nearly 60% of the global population. China’s population of nearly 1.4 billion people is equivalent to nearly 20% of the world’s total and makes it the most populous country in Asia and the Pacific.
Keeping this in mind, the practise of reverse dropshipping would allow you to reach a massive market of consumers looking to purchase high-quality goods, which can be difficult to come by in China and other Asian countries. Since online purchasing has rapidly become the norm, your dropshipping store has excellent potential for success.
As was previously mentioned, reverse dropshipping is a fantastic business idea because of the tremendous growth of the eCommerce industry in Asia. However, the Chinese online retail market is the biggest in all of Asia. According to Statista, by 2022, Chinese online retail sales were generating over $1 billion in revenue, with that number expected to grow to over $1.6 billion by 2025. The growth of China’s e-commerce market from 2017 into the foreseeable future is depicted in the following GlobalData-provided graph:
When you consider all of these factors, it’s easy to see how reverse dropshipping in Asia, and particularly China, could help you reach a massive audience and sell a lot of product.
Gains in profit margins are possible.
Dropshippers can usually make more money off of high-quality products than they can from low-quality ones because of the higher perceived value of the former. In other words, thanks to the high regard in which they are held by purchasers, the value of such items has risen dramatically. They follow suit by raising their prices.
High-end fashion is one of the best niches for this dropshipping model because of the potential for large profit margins on the products you sell. Customers in China and elsewhere in Asia will be interested in purchasing luxury apparel because of its reputation for producing well-tailored fashion pieces made from the finest materials. Furthermore, the luxury apparel segment, which is expected to bring in 81 billion USD in revenue by 2022, can bring substantial earnings to your reverse dropshipping business, providing your store with noteworthy scalability.
Market saturation is something you can easily avoid.
If you want to test out dropshipping but aren’t confident in your ability to compete, a reverse dropshipping business could be the answer. It can take dropshippers some time to figure out how to differentiate their businesses from the competition when they run a traditional dropshipping store. Also, this can be won by taking clever measures and using creative strategies, allowing your online shop to outperform the competition.
But if you’re still set on breaking into a less competitive market, the reverse dropshipping model is a great way to do so. Due to the novelty of this form of dropshipping in the eCommerce sector, you would be dealing with significantly fewer competitors. With that off your plate, you can put your energy into expanding your business, creating new advertising campaigns, and securing new Asian clientele.
When utilising a reverse dropshipping model, what should you keep an eye out for?
It’s important to find your place in the market.
Since you’ll be dealing in high-quality goods as part of your reverse dropshipping business, it’s vital that you devote some time to carefully choosing your niche. As was previously mentioned, the high-end clothing market is a fantastic place to do business because it provides access to uniquely designed clothing items that are hard to come by on Asian sole, and because Asian customers, particularly Chinese customers, appear to strongly prefer shopping from luxury fashion brands over regular brands.
Business publication MartinRoll claims that Chinese consumers account for nearly half of all luxury spending worldwide. Statista’s research supports this idea, as it shows that China, followed by Japan and South Korea, is the world’s top producer of high-end products.
According to MartinRoll magazine, the growing middle class in China has disposable incomes of between $2,600 and $3,900 per year, which explains the country’s penchant for luxury goods. More and more Chinese consumers have been able to afford high-end clothing and jewellery thanks to rising wages.
Working with Dropship Corporation, a reverse dropshipping supplier, will allow you to successfully enter the Chinese luxury apparel market if you choose luxury fashion goods as your store’s niche. Dropship Corporation has over 15,000 products and offers international shipping to over 170 countries, including China, to help your business succeed.
You can get the following products from this dropshipping vendor to sell in your online shop:
- Dresses by Dolce & Gabbana
- Accessorize with Gucci.
- Bags by Michael Kors
- Men’s Jimmy Choos
- A pair of Swarovski spectacles
- Gant timepieces
Modify your advertising approach.
Remember that advertising strategies in Asia are vastly different from those in the United States or Europe, for example, if you want your store to get a lot of exposure through the reverse dropshipping model. You may find your marketing options constrained by China’s censorship of major social media platforms like Google, Facebook, Instagram, Twitter, and YouTube, with the exception of Hong Kong and Macau.
However, all is not lost; citizens of the vast majority of other Asian countries are still free to use these apps. There’s no need to freak out about reaching Chinese customers, as the country has its own widely used search engine (Baidu) that you can easily leverage to narrow in on your target demographic. If you tailor your e-shop to this medium, your advertising efforts will succeed.
When you take into account the aforementioned factors, reverse dropshipping becomes an option worth exploring, especially if you intend to sell high-quality goods. You can avoid the cutthroat traditional dropshipping market and still reach a sizable audience with this strategy. Your reverse dropshipping store has a good chance of succeeding if you choose a profitable niche and focus on developing marketing strategies that are tailored to appealing to Asian consumers.