eCommerce & dropshipping – what I wish someone had told me before starting

What is dropshipping in e-commerce?

Dropshipping is a popular e-commerce business model that allows online store owners to sell products without holding inventory. In this model, the store owner partners with a supplier who ships products directly to the customer. This way, the store owner does not have to worry about storing or managing inventory and can focus on marketing and sales.

Dropshipping is an excellent way for entrepreneurs to start an online business with minimal upfront costs. It also allows for scalability and flexibility, as the store owner can easily add or remove products from their catalogue without worrying about inventory levels. This model is particularly appealing for those looking to enter the e-commerce space without the financial burden of stocking products.

Is selling on online retail platforms like Kaup24 a good idea?

Many people dream of creating an eCommerce business to run from home and sell online using direct retail platforms like Kaup24, Amazon, and others.

Many of us are enticed by the idea of dropshipping. So many dropshipping platforms target people in Estonia with ads on Instagram about how easy it is, and tactics that dropshipping companies use to sell products on their websites without keeping them in stock.

There’s no need for a warehouse or inventory.

Instead, a dropshipping business works with a supplier, typically a manufacturer or wholesaler, who can import products and fulfil customer orders. When an order is placed, the supplier is notified to ship the product directly to the customer.

Using this method, the seller does not have to outlay capital for stock or take the risk of buying stock that they might not be able to sell. This differs from the standard eCommerce model, in which the seller buys stock from the manufacturer and ships it to the customer. Shipping is either done directly by the seller (often from home) or via a delivery warehouse.

Ning, this model alleviates the logistical burdens for e-commerce site owners, making it an attractive option for online sales.

With no startup costs, why don’t we all do it?

However, there are benefits and risks with both systems.

MoneyHub decided to interview some local Estonian eCommerce retailers to get their perspectives on working with the most frequently used local platform, Kaup24, and to learn what issues they experienced.

What was your experience of using Kaup24’s like?

Kaup24 contacted us in the first instance as we were selling on Osta.ee, and they asked us if we would like to sell on their platform. So we were slightly flattered at first. They contacted their onboarding team, and we signed the contracts, excited to have found a new way of selling. However, the onboarding process was very poor.

Usually, an eCommerce system can load many products simultaneously through a spreadsheet upload facility. Unfortunately, Kaup24 did not work very well.

In contrast, Shopify offers robust functionalities for dropshipping, including seamless order processing, integration with payment gateways, and efficient inventory management. Setting up a Shopify store is straightforward, making it an ideal choice for entrepreneurs launching an online business.

The manual update facility didn’t work, and the staff who were supposed to support the process did not seem to understand what they were doing or their own system most of the time.

The result is that it took a very long time and considerable effort to get our products listed, which used up most of the three months of free onboarding time we were given. It’s important to remember that most eCommerce platforms charge a monthly subscription, so even if you don’t do any business, you will still be charged.

Many platforms promise a lot when signing up, but they are not helpful if you want to close your account. They will continue charging you, but make it very difficult to do so.

Unfortunately, our experience with Kaup24 was that they continually overcharged us for services, and the account processing was complex.

We spent a lot of time fixing their mistakes.

What are your thoughts on dropshipping on these platforms?

Forget it.

Nearly all Dropshipping companies, like VidaXL, charge a subscription fee to use their products. Most appear more interested in getting you to sign up and start paying than offering you anything you can actually sell at a profit. Based on our research, companies like VidaXL also directly sell the same products on the same platforms. Dropshipping võimaldab businesses to sell products without managing inventory or logistics, but it comes with its own set of challenges.

You can’t undercut the supplier.

So, by loading their product catalogue and having to charge more, all you do is make them look good. This is because 95% of buyers will seek the lowest price. Also, you will have to deal with the complexities of passing one order from your platform back to them to fulfil. It’s also important to remember that you’re not the only person doing it, as it’s relatively easy to set up. Thus, the competition is very high, and margins are tight. You should also consider your return process if the customer doesn’t accept the order because it’s damaged or they have changed their mind. It’s your problem, not the drop shippers. Managing oma customer inquiries and maintaining efficient communication with suppliers is crucial in this business model.

It sounds like your overall experience has been negative. What advice would you give any reader considering starting a similar business?

Probably not to do it.

Unless, of course, you have your incredible and useful product that is not available elsewhere. You will spend a lot of time dealing with issues for little return. It’s also worth considering that you are up against platforms like Temu. 

Many Chinese suppliers have learnt how to game the system and don’t pay any import tax. They also benefit from extremely low postal charges. 

So that is difficult to compete against. 

Kaup24’s only central selling point is that it is local and has managed to create a certain level of trust. This ‘trust’ comes at the expense of their sellers, not the platform itself. If you examine time and effort versus reward, we have lost money trying to sell on this platform. 

So we can’t recommend it but if you’re determined to go ahead we would advise the following…

What would you say to Estonians looking to get started with dropshipping?

If you’re determined to try dropshipping despite the challenges, it’s crucial to approach it strategically. Success depends on careful product selection, reliable suppliers, effective marketing, and efficient order management.

Step1: choosing the right products

The first step is selecting products that are in demand, profitable, and easy to ship. To identify trending items, conduct market research using tools like Google Trends, Amazon, and eBay.

Social media platforms can also provide insights into what people are talking about. Look for products that are lightweight, reducing shipping costs and potential complications. A good rule of thumb is to aim for a profit margin of at least 15-20% to ensure sustainability.

Also, choosing products not widely available in local stores can give you a competitive edge.

Step 2: finding and working with suppliers

Once you have chosen your products, you need to find trustworthy suppliers. Platforms like SaleHoo and Worldwide Brands offer directories of vetted suppliers. Before committing, check reviews and contact suppliers directly to clarify shipping policies, pricing, and product availability. Building strong relationships with multiple suppliers can help diversify your inventory and reduce risks associated with stock shortages or unreliable partners.

Consider when choosing suppliers, include:

• Their reputation and reviews from other sellers
• Shipping times and return policies
• Pricing and willingness to negotiate better terms

Step 3: marketing and promotion strategies

Driving traffic to your store is essential for making sales. Social media platforms like Facebook, Instagram, and TikTok are potent tools for reaching potential customers. Invest in influencer marketing to boost credibility and expand your audience.

Email marketing also effectively engages existing customers with promotions and product updates. Additionally, optimising your store for search engines can help attract organic traffic. Consider offering discounts or special promotions to encourage first-time buyers and build customer loyalty.

Step 4: Managing orders and shipping

Once your store gains traction, order management and shipping become critical.

Work with reliable shipping carriers to ensure timely delivery and provide customers with tracking information to enhance transparency. Offering multiple shipping options can help cater to different customer needs.

For those handling higher order volumes, using a fulfillment service can streamline logistics and reduce manual workload. Maintaining good customer service by responding to inquiries promptly and resolving any issues efficiently will also help build a positive reputation.

Step 5: Use a knowledge dropshipping platform that understands what you’re trying to sell

While dropshipping offers a low-risk entry into e-commerce, choosing the wrong platform can lead to financial loss and frustration. Many platforms, including VidaXL and Kaup24, may seem appealing but often come with hidden fees, poor support, and unfair competition.

Platforms like VidaXL frequently sell the same products at lower prices, making it difficult for individual sellers to compete. You may also face unexpected charges, complex return processes, and a lack of control over shipping times and product quality. Kaup24, for example, has been known to overcharge sellers, provide poor onboarding, and make account closures difficult.

If you plan to start a dropshipping business, thoroughly research platforms before committing. Look for transparent pricing, good customer support, and a fair marketplace that does not undercut its sellers. Consider alternatives like Shopify, which allows you to build your own store and maintain control over pricing, branding, and customer relationships.

With the right approach, dropshipping can be profitable, but only if you avoid platforms that prioritise their profits over your success.