Complete Guide To Reverse Dropshipping

Reverse dropshipping is getting increasing recognition lately. Before you follow the crowd, do yourself a favor: understand what reverse dropshipping is and get acquainted with its challenges.

This article will explain everything you need to know about reverse dropshipping. In the end, you will know the pros and cons, and more importantly, how much work is required to succeed in it.

So, what is reverse dropshipping, and is this something you should do?

Reverse Dropshipping Explained

Reverse dropshipping is still dropshipping, but instead of sourcing your products from a “manufacturing country,” you source them from countries that are not known to be manufacturing hubs. Then, you sell these products to the “manufacturing countries.”

Here is the setup for traditional dropshipping:

• You source the product from China (it is a manufacturing country)
• You sell the product to wealthy countries like Canada, the USA, and the UK

Another common dropshipping set-up is to find a print-on-demand supplier, most of whom are also located in manufacturing countries.

Now, here is the setup for reverse dropshipping:

• You source the product from a country like Liechtenstein (it is not a manufacturing country)
• You sell this product to China or other countries like the USA, the UK, or Canada

All countries manufacture something. In this context, the term “manufacturing country” refers to the giants of manufacturing, like China, the USA, and India.

So, why would you do this? Why do the opposite? Most manufacturing countries (like China) produce affordable products. This affordability comes at the cost of quality. Many people, both in China and America, are growing tired of these products.

There are consumers out there who want high-quality products, and they will be more than willing to pay a premium price for them. We all know that if your product is made in China, people would immediately scoff at it and won’t be willing to pay a high price.

The goal of reverse dropshipping is to find premium products from relatively unknown countries and sell them to wealthy countries. But why?

Benefits Of Reverse Dropshipping

Reverse dropshipping is focused on high-quality and high-profit margin niches. What you want to do is make money from products that many dropshippers ignore because they are costly.

Below are its benefits, but it also has some drawbacks that will be explained later.

1. Earn More Money By Reverse Dropshipping

The traditional dropshipping set-up can only make you pennies or a few dollars per sale. You need volume to make a profit from it. Below is an example of a dropshipping product found on Amazon, sold at $36.

The supplier from AliExpress sells it for $27, so you will make a profit of $9 per sale.

If you sold ten of these in a month, you would have made a profit of $90. You need to sell 100 of them to make a gross profit of $900.

The trouble with this dropshipping set-up is that many dropshippers will cut or slash their prices. Some are even willing to lower their profit by a dollar. After all, many dropshippers are not from the US, and they can stretch a dollar in a way that Americans cannot.

If you do reverse dropshipping, like selling authentic katana from Japan, $1,000 is a small profit to target. Below is an example of an authentic katana.

The one on the left is on sale, and there is only one piece of it in the world. It is an authentic katana, but it is not ancient. You can do reverse dropshipping and sell this piece for at least $3,000 in the US.

2. Target Loyal And Niched Consumer With Reverse Dropshipping

One of the best benefits of doing reverse dropshipping is customer loyalty. The Katana example is just one of the many things you can reverse dropship where you can find loyal customers.

Anyone who buys this katana from you is not your typical customer. He is likely an enthusiast of ancient Japanese traditions, and he has a lot of money to spend.

Customers like them easily get attached to sellers—they will not buy from anyone else unless you drop the ball in your transaction.

Customers like these are indeed hard to find. But once you find them, and you sell them something they love, they will keep coming back.

3. Experience Lower Competition With Reverse Dropshipping

Another benefit of reverse dropshipping is that you will have very little competition. How many dropshippers can afford to spend $2,000 on one product?

Apart from the price, you are also jumping away, not into, the bandwagon of dropshippers. Most dropshippers source their products from AliExpress or websites like Spocket. They all sell the same things.

The reverse dropshipper, however, sources products from relatively unknown but reliable suppliers. Quality is the name of your game, and this makes your niche difficult to get into. If anything, your only competitor is likely the supplier itself.

Drawbacks Of Reverse Dropshipping

If reverse dropshipping is profitable, what can go wrong with it? Well, it is not a walk in the park. It is difficult to find customers for it, and the money you have to spend is significantly bigger than traditional dropshipping.

1. Reverse Dropshipping Requires Expertise

Traditional dropshipping requires almost no degree of expertise. You do not need to be a professional to sell phone cases. You do not need to be a dog expert to sell dog food bowls.

But how can you sell authentic katana if you know nothing about this niche? At the very least, you need to have a solid understanding of the following:

• The different warring eras of Japan
• The various types of metals and forging techniques
• The names of renowned swordsmiths in Japan
• Types of blades, finishes, etc.

You do not just need to know them, you need to understand words like wakizashi, tachi, tanto, and many more. Your buyers will know if you are faking, and you will have lost a customer if you have no idea what you are talking about.

2. Reverse Dropshipping Requires A Lot Of Money

The Katana example earlier must have shocked you. The cost of that katana, on sale, is around $1,800. If you ever manage to sell one, you will pay the supplier $1,800 to get it shipped.

Since you are selling authentic items, you also need to pay for insurance. Many reverse dropshipping products are expensive. While it is possible to find products that are within a regular customer’s financial reach, most of these are genuine products sold only to the wealthy.

Here are some more things you will spend on:

• Your website – forget about themes and templates in Shopify. You need a sophisticated website that screams authenticity and luxury.
• Shipping costs – expensive products are also more expensive to ship. It is not only the insurance that you have to worry about. Luxury items are treated as premium goods. Since the logistics company will handle it with extra care, you also have to pay extra.
• Payment for customs – luxury items will not pass through a country’s customs so easily. All countries only allow a specific price point where the item will not be taxed. Anything more than that has an accompanying customs duty or tax.

Then, you need to spend a lot of money on ads. No one will find your website through organic reach. After all, not a lot of people search for stuff with the keyword “expensive.” It is on you to find a way to reach wealthy clients and customers.

3. Reverse Dropshipping Has Few Suppliers

The last challenge in reverse dropshipping is the availability of supply If a supplier goes belly up, it would be really tough to find a replacement supplier.

You will not find these suppliers in AliExpress. Most reverse dropshipping products are unique and are not mass-manufactured like products in China.

Dropshipping Business Ideas

1. Souvenirs And Mementos

People usually buy these things when they visit a country, but this does not mean that people do not want to buy them online. Many individuals feel a connection to some cultural items, and these are the people you want as customers.

Here are some reverse dropshipping products that fall in this category:

• Shadow puppets from Indonesia
• Fabric and other wearables from India
• Jewelry with local designs and carvings
• Incense and candles, or products that have something to do with rituals
• Refrigerator magnets and paperweights

People buy souvenirs and mementos for one reason only: these things trigger memories of fun times and happy moments. However, not everyone can buy plane tickets to go on their dream vacation. The people you want to target are both those who have been to places and those who want to go but cannot.

2. Cultural Items (Handcrafted And Authentic)

Cultural items are those that reflect the traditions of a certain group, tribe, or ethnicity. These products are common in America, but most of the things you will find on Amazon are replicas.

To qualify for reverse dropshipping, you have to find a craftsman who sells his items online. These are mom-and-pop stores that sell most of their items in tourist spots.

Here are some reverse dropshipping products that fall in this category:

• Shadow puppets from Indonesia
• Fabric and other wearables from India
• Jewelry with local designs and carvings
• Incense and candles, or products that have something to do with rituals
• Refrigerator magnets and paperweights

Wood carvings are a bit of a stretch. You will make a lot of money from them, but you must also prepare a huge amount of capital. These things are heavier than furniture, so get ready to pay for the shipping costs, too.

Things like pottery, on the other hand, are highly fragile. Many of these items may break in transit. Unfortunately, many local sellers do not have any clue how to ship properly. Nevertheless, if you spend time looking for suppliers who ship globally, you will surely find one you can work with.

3. Cosmetics And Fragrances

You may know that fragrances sold around the world come from select countries like France and Italy. There are many branded fragrances you can buy from suppliers, but what you want to do in reverse dropshipping is to sell locally made ones.

For example, you can find cosmetic companies in South Korea, the world’s capital for beauty products, and dropship from them. Here are some more products you can add to your list:

• Perfume from Singapore
• Fragrances from Kannauj, India; people call these colognes “Attar”
• Bath Bombs from Japan
• Plant-based body care products from Malaysia

Of course, you should not dropship these products unless you know what the key ingredients are. Many people from the leading economies of the world are too worried about allergies.

As a cosmetic and beauty product seller, you must enumerate the ingredients and what they do. People are also apprehensive about how these cosmetics are tested. Your business would be dead from the start if animals went through abuse in making or testing these products.

4. Food And Ingredients

Food is difficult to dropship because of customs laws. Some countries do not allow the shipment of food unless the seller has proper documentation.

That is why his niche is an excellent option. The higher the barrier to entry, the better it is for you. You will have less competition, and this should put you in a position of exclusivity.

Here are some products you can check out:

• Coffee from Africa
• Packed Japanese ramen
• Spices from China and India
• Ingredients from Malaysia like Nasi lemak, satay, laksa, and others
• Dried or preserved mango from the Philippines

It is a good idea not to ship the food to all countries right away. The right thing to do is to understand the legal expectations of the destination country. This will take a lot of work, but it will be worth it in the end.

If you succeed in securing a permit to import food and ingredients, you will be one of the few online stores that sell these products.

Alibaba Dropshipping: Can It Be Done?

Can you succeed in dropshipping from Alibaba? Alibaba dropshipping does not match the profile of reverse dropshipping, but you can set yourself apart from other dropshippers if you source your products from wholesale manufacturers.

Alibaba is the world’s biggest B2B marketplace. The sellers here offer their products to wholesalers, or people who do traditional retail, not dropshipping.

So, how can you use Alibaba with dropshipping? Well, there is a concept in dropshipping called private label. Then, it has a counterpart called white label dropshipping.

• Private label – a company manufactures your products based on your specifications; no one else will have this product but you.
• White label – a company will mass manufacture products according to their specifications, and they will merely slap your brand name on the items.

You can find suppliers in Alibaba who do both types of manufacturing processes. The big difference between these and traditional dropshipping is that you will pay for the products in advance.

Usually, the supplier will ship your goods to your preferred location, including a warehouse of Amazon in the US. However, you can ignore this process and ask some suppliers to do the warehousing.

Once an order comes in, they will ship the item to your customer. This comes with a fee, of course, and the cost of the extra work, or 3PL logistics, depends on the supplier.

Since you want to sell premium products at a high profit margin, the best course of action is to look into private-label dropshipping. It would cost you more money to get started, but you will be able to build a brand and earn more.

Where To Find The Best Reverse Dropship Vendors

There are no marketplaces for reverse dropshipping. You can only find these suppliers through careful research.

Once you have decided on a niche, you can start looking for suppliers in “non-manufacturing” countries who do business online.

A good example is local souvenirs. Typically, you would have to go to a country, find a souvenir store, make a deal with them, and then dropship their items. Before doing this, do your best to find suppliers online so you do not have to fly to any country.

Here is an example:

This website is a hub for all things Japanese. They also ship from Japan. The cat figurines in the image are called Maneki-Neko, more commonly known as the “beckoning cat.” They are a symbol of good luck.

You will find many of these on Amazon, but almost all of them are mere replicas. They are not handcrafted, which makes them cheap. The ones in the image above are authentic, and you can target collectors of these from all over the world.

Another example is the rattan bags of Indonesia. Below is an image from a website that sells authentic rattan bags.

These are authentic handmade bags that you can sell at a premium price. If you go to Amazon, you will find similar products that claim they are hand-woven, but upon closer inspection, you will know that those bags are mass-manufactured.

For your guidance, here are some steps you can follow to find reverse dropshipping vendors and suppliers:

• List down the authentic and unique products you want to sell
• Know where that product originally comes from (think of tradition and culture)
• Use Google to search for suppliers (use keywords + name of country)

Once you have the results from Google, go to the About Us section of every website. Look for the online store’s physical address or phone number. This should tell you where they are located. If they are not in the country of the product’s origin, skip the website and move to the next one.

Bookmark the pages and contact the sellers. Ask them if they are willing to dropship. Explain carefully that you will pay them for the product before they ship.

It is important at this point to know where you plan to ship. Tell the supplier of the target shipping destination, and this will allow them to determine how much shipping cost you’ll have to pay. Do this many times as you target different countries, until you have a list of typical shipping costs.

Do not forget to test whether the product is affordable. It is highly recommended that you do this, and it is also the reason reverse dropshipping is difficult to get into. It requires substantial capital because you want to make sure that the items you sell are authentic.

Once you have a plan, launch your dropshipping website and copy-paste the suppliers’ product images and descriptions. There is no automatic way to do this. You must do it manually.

FAQ: Complete Guide To Reverse Dropshipping

What is the reverse method in dropshipping?

Reverse dropshipping means you buy products from small “non-manufacturing” countries and sell them to “manufacturing” or wealthy countries.

Is reverse dropshipping legal?

Yes, reverse dropshipping is legal. However, expect some issues with customs because most reverse dropshipping products are expensive and taxes or duties must be paid.

What is the opposite of reverse dropshipping?

The opposite of reverse dropshipping is traditional dropshipping. In the latter, you buy products from manufacturing countries like China and sell the item to the US or other wealthy countries.

What’s the problem with traditional dropshipping?

There is no problem with traditional dropshipping. It is just like any other business that has challenges and difficulties. Most people say it is problematic because they expect it to be easy. If they fail, they blame the system instead of recognizing their shortcomings.

Summary

Reverse dropshipping is one that takes a lot of time and consideration. It is a difficult type of dropshipping because it is, in a way, specialized. If you are new to dropshipping, you may want to consider traditional dropshipping first.

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