If you've started looking into how to start a dropshipping business, you'll no doubt come across articles about many different aspects of dropshipping. You may have read articles on topics like what is drop shipping, how to dropship, how dropshipping works, or even drop surfing.
But, have you heard about reverse dropshipping? It's a unique take on the dropshipping model with lower competition, but a few interesting quirks and regulations.
Let's take a look at what reverse dropshipping is, the pros and cons of reverse dropshipping, and how it compares to traditional dropshipping for different dropshipping business ideas.
What Is Reverse Dropshipping?
Reverse dropshipping is a business model where high-quality products are sourced from countries that usually import products and sold in countries that usually export them. For example, many traditional dropshipping companies procure products manufactured in various Asian countries for their dropshipping niches. These products may be low quality and come at a lower cost, with accompanying low margins. This is what leads many to ask "is dropshipping worth it?" In the reverse dropshipping model, higher-quality products would be procured from outside of those countries and sold within them.
Reverse Dropshipping Pros
Reverse dropshipping is a niche form of dropshipping that many businesses aren't aware of or aren't investing in. However, there are many benefits for those companies that are actively performing reverse dropshipping.
Here are a few pros of reverse dropshipping:
Better Margins
One of the most appealing aspects of reverse dropshipping is that the dropshipping profit margin is higher than the traditional model. Since most dropshippers usually rely on purchasing low-quality goods in bulk, the margin is fairly low (see markup vs margin). In fact, this reliance on low-quality products can damage your business, and this model has previously led many consumers to ask "is dropshipping dead?" and "is dropshipping legal"?
With reverse dropshipping, you'll focus primarily on selling smaller quantities of high-quality, high demand products. This means your markup will be higher and so will your margin. However, you will have to put more time and energy into learning how to find dropshipping suppliers that can operate in the reverse direction.
Less Competition
Since reverse dropshipping is still a niche market, there's a lot of room to take market share. Instead of competing against thousands of dropshippers, you'll only be competing with a few businesses. These businesses may also not have a great handle on how to sell online. So, if you use a dropshipping website builder to create a smooth experience, you can really stand out from the crowd and take control of the market easily. This also means your dropshipping ads are cheaper.
For food suppliers, the best choice is BlueCart eCommerce. It has cutting-edge tools and resources for selling B2B wholesale food (see what is wholesale), DTC food, or both. Even better, all BlueCart customers also get listed in our wholesale marketplace where their products can reach 92,000+ buyers in the U.S.
Reverse Dropshipping Cons
While reverse dropshipping offers a higher margin and a less congested market, there are a few reasons other companies aren't doing it.
Here are the cons of reverse dropshipping:
Tough To Market
One of the biggest issues with reverse dropshipping is that it can be difficult to sell the best dropshipping products abroad. While eCommerce PPC may work in your country, it may not in others. They may also use different social media platforms or there may be a language barrier. You need to understand the market you're expanding into, their unique needs, and any cultural differences that will impact your ability to make sales. You may need to create some dropshipping jobs and hire locals in the areas you want to sell to help make this easier.
One way to mitigate this issue is to invest in affiliate marketing vs dropshipping, where you have influencers and bloggers from your target market help drive traffic to your site. Even the best dropshipping websites are only successful because they get enough visitors each day. This is vital if your business is going to succeed.
Barriers To Entry
Unfortunately, there are a few barriers to entry when trying reverse dropshipping. First, many countries have very strict requirements regarding what products are allowed to be sold and who can sell them. Importing certain products like electronics, food and beverage, medication, and more are all likely to be regulated in the market you're looking at. So, if you're thinking about selling food online, sell wine online, or even sell baked goods online, the reverse dropshipping model is likely not the right choice and choosing it is one of many dropshipping beginner mistakes.
Second, logistics can be very difficult. Shipping internationally is easier than ever, but it's still much more complicated than domestic shipping. Whether your suppliers use bulk shipping or handle order fulfillment for each individual order (see order fulfillment meaning), there's a good chance those products will be held up at an international border. This can make it difficult to get products to your customers in a timely manner. This will certainly cause issues for your customer service for dropshipping team.
Tariffs May be Off-putting
The other difficult thing with international shipping is the tariffs. Tariffs are fees that a country, province, or state charges when international products are delivered. While nearly every country charges tariffs, some are exorbitantly high. These tariffs can also change based on the relationship between two companies, so you can suddenly see your fees skyrocket in a country you've been reverse dropshipping in for ages. When doing research for a reverse dropshipping business, it's important that you look at current and historical tariffs to determine if it's worth pursuing. No level of demand planning will help if the fees you pay to get the products to your customers outweigh your revenue.
Flip It and Reverse It
The reverse dropshipping model is often overlooked but continues to grow as global markets interact more often. By selling high-quality goods in emerging markets, you can increase eCommerce sales and grow a foothold in a fast-growing area. You may also want to look into automated dropshipping tools to help make this all a bit easier. These tools are also great to include in your drop shipping business plan to help attract investors.
For more guidance on how to make money dropshipping, make sure to check out our free drop shipping for dummies guide, read some of the best dropshipping books, or take some dropshipping courses.
Popular Product Categories Suitable for Reverse Dropshipping
Reverse dropshipping focuses on luxury or tech products that have limited supply in countries with lower average income like China and India. However, the income gap in these countries can be very large between the wealthy and the middle and lower classes. Thus, there might be a large demand for some of the following product categories.
- Smart home devices. From smart lighting to smart security devices like cameras, there’s high demand for these products in countries from the developing world. They can help homeowners stand out from the rest and turn their house into a technologically-advanced home.
- High-end apparel. Although designer clothing is usually associated with the Western world, wealthy people in developing countries might still need such products. Thus, reverse dropshipping for this product category can be profitable. Sustainable apparel like seaweed fiber clothing or hemp apparel are other examples of suitable goods to reverse dropship.
- Luxury cosmetics. That includes high-end makeup products and organic cosmetics. As these products are often bought online, reverse dropshipping for this product category can be easy and seamless.
- Drones and other tech gadgets. There are a lot of technology enthusiasts all over the world. They look for technical gadgets online as they can compare their characteristics. This makes them ideal for reverse dropshipping.
- Premium baby products. Parents usually wish to buy the best possible products for their babies and grown-up kids. That’s why reverse dropshipping of high-end baby products can be especially profitable if done in countries in the developing world.
- Designer shoes and fashion accessories. From luxury watches to high-end sunglasses, there’s a wide variety of product categories that can be sold in developing countries via reverse dropshipping.
- Ergonomic office furniture. As these countries are rapidly developing, there are a lot of new office jobs. Therefore, the demand for ergonomic office chairs and adjustable desks is likely to increase a lot in the future.
Frequently Asked Questions About Reverse Dropshipping
Reverse dropshipping is an interesting twist on a wildly popular eCommerce business model. If you have more questions about it, check out the common questions and answers below:
Does China not dropship?
Dropshipping from China happens in some circumstances, but is not a popular dropshipping method. There are several reasons for this.
One, buying products directly from another country is considered importing, not consumer purchasing. Importing comes with governmental paperwork requirements, so it’s much easier to dropship from wholesale or retail suppliers rather than manufacturers themselves.
Two, ordering products directly from China means slow shipping times, and most dropshipping businesses rely on fast shipping and handling.
Three, Chinese manufacturers don’t dropship because they already have vast networks of wholesale buyers and retail distributors. It makes greater financial sense to mass produce goods and sell them in large volumes to companies who can reach thousands of customers at a time.
Where can I dropship from other than China?
A few dropshipping alternatives to Chinese sources are Spocket, Printful, Salehoo, and Doba. You can also dropship products from any seller or manufacturer that you have access to.
As we mentioned in our article on how to make money dropshipping, any product that is currently available online that you can sell at a higher profit margin can be dropshipped. One method a lot of people use is sourcing items from eBay, then selling them on websites like Amazon, Etsy, or their own eCommerce website.
To ensure that you aren’t dropshipping products directly from China, always do your own research. The global eCommerce market has grown exponentially in size and you can only be positive of a product’s origins if you see it in writing.