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Dropshipping has several aspects. Reverse dropshipping is one of them.
If you want tIn this article, I will share what is Reverse dropshipping, its Pros & Cons, How it works, the Target market, Challenges To Entry, and Why Opt for this new concept of Dropshipping?
What is Reverse Dropshipping? How Does it Work?
In Reverse dropshipping, high-quality products are sourced from rich countries (like the US, and the UK) that mostly import products and are sold in countries that usually export them (like China).
Let me simplify it with an example. In traditional dropshipping, drop shippers procure products manufactured from countries like China for their dropshipping niches and these products are generally low quality and come at a lower cost and low margin.
In Reverse dropshipping, this while concept is reversed and higher-quality products are procured from outside these countries and sold in the countries.
Where should you do dropshipping?
The answer is very simple. You need to choose a market that is huge and where there are people who can afford to buy these products. The above Wikipedia graphic should give you an idea. China is the biggest market followed by Japan, Germany, and the UK.
Japan, Germany, and the UK are generally considered high-quality product manufacturers and so China should be your largest market due to its large population and second maximum number of millionaires.
However, you can still target these and other markets with specific products they need.
Reverse Dropshipping Pros
Here are a few pros of reverse dropshipping:
Better margins
In reverse dropshipping, you sell smaller quantities of generally expensive high-quality, high-demand products. As a result, you stand a better chance to earn better profit margins.
Less competition
This concept is relatively new and so competition is less. Less competition means more success rate.
Good return policies
The suppliers in countries like the US and Europe are more customer-centric and provide better return policies than their counterparts in China.
Reverse Dropshipping Cons
Here are the cons of reverse dropshipping:
Different marketing conditions
In reverse dropshipping, it is difficult to market your products in some countries because of different marketing conditions.
For example, Google and Instagram are banned in China and in some other countries. So, it may be difficult to promote your products through these channels and you may need to look for other alternatives to showcase your products to potential buyers.
Barriers to Entry
Your target countries may not allow certain items. So, you need to understand what all you can sell. International customs and tariffs may create problems because countries like China are not as open as the US and Europe.
The language limitations
Chinese do not speak much English like Indians. The majority of the people speak their own language and so language can be a barrier when it comes to advertising your products and dealing with them as a customer.
You need a translator which can cost you. When reverse dropshipping, you need to take care of this aspect as well.
In an effort to boost their economy, they may add exorbitantly high tariffs. You need proper research to see where your suppliers are located and if your marketplace country is on friendly terms with your supplier country.
An example is, that selling high-quality US-made products is easy in countries that are friends of the US like the UK. However, it is very difficult to sell the same products in China or Hong Kong.
Is Reverse Dropshipping Worth It?
Now the big question – Should you do reverse dropshipping?
The answer is Yes and No. As you are now aware of what it is and its challenges as well as opportunities, you need to take a call. If you can get through all the barriers ahead, you should go ahead. It is better if you have lived in your target country or know its language as it will mitigate the challenges.
For a newbie, it will be a difficult path to success. However, the opportunities are abundant.
Quick links:
- How to dropship in India
- Best dropshipping companies in India
- AutoDS: A dropshipping automation software
Conclusion
Reverse dropshipping is relatively a new concept. It offers opportunities and challenges alike. At this time, it will be difficult to say if it will ever be as easy as dropshipping in the US and the UK. However, if you have the resources and try it, you could be among the first ones to benefit from this concept of dropshipping.
All the best with your efforts!
If you have tried it before or want to share something, do leave your comment in the box below.
