Local vs. International Drop shipping:
Choosing the best fit for your online business
Are you an online seller who’s considering drop shipping but is unsure which option is the best fit for you? Should you go for local drop shipping or opt for an international one? Fear not, by the end of this article, we will explore the pros and cons of both local and international drop shipping, giving you all the necessary information to make an informed decision.
If you’re looking to start a drop shipping business, it’s crucial to understand the difference between local and international options. While both have their advantages and disadvantages, choosing the right one can make or break your business.
In this comprehensive article, we’ll be delving deep into the world of drop shipping, comparing the requirements, time consumption, success ratio, profit, and investment of local and international options.
1. Requirements:
To begin, let’s discuss the requirements for international drop shipping in Pakistan. Firstly, a payment gateway is a requirement for you to start drop shipping. You must have it in place before proceeding.
While there are some challenges to consider, such as limited payment gateway options, with only Skrill and TwoCheckout currently available, the bigger issue lies in the account approval process. Getting your account approved requires fulfilling various stringent requirements, which can be a bit of a hassle. However, once your account is approved, you can start benefiting from the global reach that international drop shipping offers.
Some people believe that having an LLC or LTD is necessary
for drop shipping, but this isn’t always the case. Typically, the main reason for setting up an LLC or Ltd. is to obtain a bank account. However, if you have a friend or relative living in another country with a bank account, you can use their account and bypass the need for an LLC or LTD. This can be a great solution for those who don’t want to go through the process of setting up a company or who prefer to keep things simple. Additionally, not having a verified address in an LLC or Ltd. can create issues down the line, making using a friend or relative’s bank account an even more appealing option.
Secondly, your store should meet international requirements, and it should be designed in a way that gives the impression of a professional international website. It is imperative to design your website thoughtfully to appeal to a global audience and ensure that it meets the necessary standards, including having policy pages such as the privacy policy, terms and conditions, and refund policy.
2. Time consumption:
The next point to consider is the time consumption involved in international drop shipping. It is a more time-consuming process as compared to local drop shipping. In local drop shipping, you can quickly start your store and easily grow it since it is based on cash on delivery. Thus, you can receive orders even with a small investment in advertising, allowing new stores to start receiving orders early. However, it international drop shipping requires more effort to make it successful. Firstly, you need to work hard to ensure that your store is secure since international customers are wary of fraudulent activities and hesitate to use their credit cards. If your website is not secure, customers are unlikely to buy from it, making it essential to make your store perfect.
Therefore, it is essential to make the website secure, ensuring that customers feel safe when making a purchase. Otherwise, having an unsecured website could deter potential international customers from making a purchase.
3. Investment:
The third point to consider is an investment. It is important to note that international drop shipping requires more investment compared to local drop shipping. Not only do you need to invest more in terms of time and effort to optimize your store for a global audience, but you also need to invest more money in advertising to reach international customers.
For instance, it requires advertising costs are generally higher for international audiences compared to local ones. In Pakistan average cost per click of Google ads is around $0.06 to $0.10 USD, whereas in the United States, it can be as high as $1 to $2 USD per click. This means that you may need to spend significantly more money to generate traffic and sales from international customers.
Therefore, it is crucial to factor in these additional costs when planning your investment in international drop shipping. You may need to allocate more funds to advertising and marketing to achieve your desired results in a highly competitive global market.
4. Success ratio:
The next point to consider is the success ratio. It is important to note that local drop shipping generally has a higher success ratio compared to international drop shipping. This is because local drop shipping offers a quicker and easier path to success, as you can start getting orders early due to the popularity of cash on delivery payment options in Pakistan.
On the other hand, international drop shipping requires more time and effort to establish a successful business. There is a greater level of competition and cultural differences to consider when selling to a global audience.
5. Profit:
International drop shipping is generally more profitable than local drop shipping due to the potential for higher profit margins. In the local market, buyers are often aware of the market prices, making it difficult to set prices that will allow for substantial profits. However, in international drop shipping, there is often more room for profit due to a larger customer base and less price competition.
For example, let’s say you find a product with an original price of $5. You can then set the price at $12, spending $1 on advertising and $2 on expenses. With this pricing strategy, you could earn a profit of $5-$6 per product sold, which is significantly higher than what you would earn in local drop shipping.
However, it’s important to note that ne to succeed in international drop shipping, you must first invest a significant amount of time and money into making your website look professional and trustworthy to potential international customers. This can involve designing an attractive website, incorporating secure payment gateways, offering competitive prices and shipping rates, and building a strong brand and online presence.
Conclusion:
In conclusion, both local and international drop shipping have their advantages and disadvantages, and choosing the right fit for your online business can be a challenging task. While local drop shipping offers a quicker path to success, international drop shipping has the potential for higher profit margins. Ultimately, it comes down to your business goals, investment capacity, and target audience. By understanding the requirements, time consumption, success ratio, profit, and investment involved in both options, you can make an informed decision and take your online business to the next level.
With the information provided in this article, you’ll be able to make an informed decision and take your drop shipping business to the next level. Best of luck in your entrepreneurial endeavors.
