Pizza Hut was struggling before the pandemic in the U.S., but has proven to be one of the winners from changing consumer behavior during the virus. Quarantined diners have turned to delivery and carryout to eat safely, with a number of pizza chains reporting growth.
In early May, Pizza Hut had its highest average sales in delivery and carryout in the U.S. in the past eight years, according to parent company Yum Brands Inc. Same-store sales were up in the low teens from the end of April through the end of May, the company said.
Kansas-based NPC, which opened its first Pizza Hut restaurant in 1962, employs more than 37,000 people.
But NPC’s debt load has burdened the company’s outlook for more than a year now. The company has spent on remodeling its units, something a growing number of chains have asked franchisees to do to modernize their brands.
Even such a large company has to face bankruptcy, not to mention individuals, there is no position that can be entrusted to life, so you also need a side job as a guarantee, but this side job can not take up too much time and energy for you, then Dropshipping may be a side job that can satisfy you.
It can be seen that Pizza Hut has already encountered a crisis and has undergone online transformation. Although this has helped them alleviate some difficulties, it is still not enough for huge debts, but it has been done enough to prove that the online business is 2020. The trend of the year, you should also have an online job to prevent sudden changes. For example, dropshipping is a very good choice, and it is very simple. With the support of shopify, all of this will become simple.
If you want to understand this industry, then please read on.
What is Dropshipping?
Dropshipping is a type of retail fulfillment method. Instead of a store stocking products, it purchases the products from a third-party supplier. The products are then shipped directly to the consumer. Sound familiar? Maybe not, but 33 percent of online stores use dropshipping as a fulfillment model.
For the store, this is a mostly hands-off process. The merchant doesn’t have to order inventory or fulfill the orders in any way. Instead, the third-party supplier takes care of the product itself.
Dropshipping is great for entrepreneurs because it doesn’t demand as much as the traditional retail model. You don’t have to open a brick-and-mortar store, pay overhead, and stock products. Instead, you open an online storefront and buy wholesale from suppliers who already have products and warehouse space.
The merchant is mainly responsible for gaining customers and processing orders in dropshipping, meaning you’ll effectively be a middleman. Despite this, you’ll reap the lion’s share of the profit by marking up the items you sell. It’s a simple business model and one that can be very rewarding.
Millions of entrepreneurs flock to dropshipping because it requires less hassle and money to get started. That’s probably why you’re interested! And the best news of all? With dropshipping, you can build a business that’s sustainable in the long term right from your laptop.
Of course, there are many drawbacks and advantages, and it’s important that we look at them before you start your own dropshipping ecommerce business. Once you understand the pros and cons of dropshipping, however, learning how to do so effectively will be a breeze.
Disadvantages of Dropshipping
1. Low profit margins.
Sure, since you don’t have to manage or store your own inventory, the overhead is low– but so are the returns.
You put less money in, but you get less money out. That means you have to do a lot of business just to stay afloat, let alone turn a profit.
Think about it this way: every sale you make, most of that money goes to the supplier.
What you earn is basically skimmed off the top.
That’s hardly enough to cover your expenses for marketing/advertising, maintaining your site, managing sales orders, and covering your office hours.
According to Fit Small Business, you can predict your income using these variables (they’re averages, so they’ll change depending on your industry and situation):.
• 20% margin.
• 2% conversion rate.
You can then calculate a working estimate using this equation:.
( Traffic x 0.02) x (Avg order value x 0.2) = Profit.
While this is fine for a quick starting estimate, there are a few problems you also have to consider:.
• Chances are, your discount on buying from manufacturers and wholesalers will be less than 20%.
• This doesn’t account for any of the additional expenses mentioned above that you have to pay from your end. It’s not the final profit.
• For most products, you’ll have to cut into your profits to keep your sales prices competitive. If you stubbornly hold on to your 20% margin, other companies will easily undercut you.
On top of that, you’ll notice that your profit is also largely determined by your traffic, so if you’re building an ecommerce brand from scratch, you’ll be struggling for a long time as you build a client base.
Plus, according to Adam Enfroy from BigCommerce, dropshipping is a lot of work no matter how you dice it. Although it seems hands off, dropshippers always have to deal with their wholesale suppliers, order processing, returns, and customer service.
It’s much more reasonable to approach dropshipping when you already have a regular source of traffic.
2. Highly competitive.
There will always be overly optimistic entrepreneurs who focus solely on the “low overhead” part, ignoring the clear evidence above.
Because very little capital is required to start a dropshipping business, that low barrier to entry means a lot of competition, with the most popular markets suffering more than others.
Basically, the bigger a company is, the more they can reduce their markups to offer the lowest prices.
Reiterating what we said above, smaller businesses have to cut into their profits just to stay competitive with their prices, and at a certain point, it becomes unsustainable.
To make matters worse, chances are you don’t have an exclusive deal with your suppliers.
3. No control over supply-chain.
In standard ecommerce, if customers complain about product quality, fulfillment speed, or return policies, you can address the problems yourself.
In dropshipping, you’re more or less at the mercy of your supplier– but you’re the one who still has to talk to your customers directly.
Dropshippers are essentially trapped, doing little more than hoping the supplier addresses the problems while simultaneously reassuring the customer about something that’s out of their control.
On top of that, there’s also a delay in communication as the dropshipper goes back-and-forth between the customer and the supplier. If one answers slowly, all communication grinds to a halt and the problems take longer to fix.
In ecommerce, customer service is paramount.
Even the slightest transgression– such as a delay in communication– pushes your customers right into the hands of your competitors.
And if they’re vocal about it, those bad reviews early on could end your business before it even starts.
everything right and still run into problems if your suppliers have issues.
Benefits of dropshipping.
Dropshipping is a great business model for aspiring entrepreneurs to start with because it’s accessible. With dropshipping, you can quickly test different business ideas with limited downside, which lets you learn a lot about how to choose and market in-demand products. Here are a few other reasons why dropshipping is such a popular model.
1. Less capital is required.
Probably the biggest advantage to dropshipping is that it’s possible to launch an ecommerce store without having to invest thousands of dollars in inventory up front. Traditionally, retailers have had to tie up huge amounts of capital purchasing inventory.
With the dropshipping model, you don’t have to purchase a product unless you’ve already made the sale and have been paid by the customer. Without significant up-front inventory investments, it’s possible to start sourcing products and launch a successful dropshipping business with very little money. And because you’re not committed to selling-through any inventory purchased up front, like in a traditional retail business, there’s less risk involved in starting a dropshipping store.
2. Easy to get started.
Running an ecommerce business is much easier when you don’t have to deal with physical products. With dropshipping, you don’t have to worry about:.
• Managing or paying for a warehouse.
• Packing and shipping your orders.
• Tracking inventory for accounting reasons.
• Handling returns and inbound shipments.
• Continually ordering products and managing stock level.
3. Low overhead.
Because you don’t have to deal with purchasing inventory or managing a warehouse, your overhead expenses are quite low. In fact, many successful dropshipping stores are run as home-based businesses, requiring little more than a laptop and a few recurring expenses to operate. As you grow, these costs will likely increase but will still be low compared to those of traditional brick-and-mortar businesses.
4. Flexible location.
A dropshipping business can be run from just about anywhere with an internet connection. As long as you can communicate with suppliers and customers easily, you can run and manage your business.
5. Wide selection of products to sell.
Since you don’t have to pre-purchase the items you sell, you can offer an array of trending products to your potential customers. If suppliers stock an item, you can list it for sale on your online store at no additional cost.
Obviously, knowing the advantages and disadvantages is not enough to understand it, you also need to know how much money dropshipping will cost you, how to start, what you need to pay attention to, and whether there is a prospect in 2020. If you want to know these, please come to our ANDTIDY official website Learn more!
How does dropshipping work on Shopify?
Two of the most common approaches for dropshipping on Shopify are to seek out a supplier located in North America, or anywhere else in the world, using supplier databases or to seek out a Shopify app that connects you and your store to thousands of suppliers.
For the latter, we recommend ANTDIY, a marketplace developed by Shopify that helps independent business owners find products to sell. With ANTDIY, you can browse AliExpress and import the products that pique your interest directly to ANTDIY– which is connected to your Shopify store– with the click of a button.
Once a customer buys a product, you’ll be able to fulfill their order in the ANTDIY app. Fortunately, ANTDIY automates this process. As the store owner, all you have to do is check that the details are correct and click the “‘ order”‘ button. The product is then sent directly from the AliExpress supplier to the customer– wherever in the world they may be.
But knowing these is not enough, this is not the point, you need to know how to start, how to choose products, what plug-ins to assist yourself, how to advertise and promote, how to know that these are feasible, you may find this to be troublesome, but it does not matter, You can come here to take a look, it is best to give it a try, only to know the results by hands-on practice, our APP can meet all your needs, you can even download to try, because it is free, if you want to know any other Information, welcome to join our group, we will tell you everything you want to know.
Our Facebook group—ANTDIY- AliExpress Dropshipping Partner Group
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