What is dropshipping?
All starting e-commerce entrepreneurs face a very hard choice that generally comes down to three questions:
1) What to sell?
2) Where to sell?
3) How to sell?
Despite the fact that the “what to sell” question takes the first place, the answer to it actually comes out of questions 2 and 3. The issue of choosing an e-commerce platform is closely connected to defining a business model you are going to use. This choice may set some limitations on the products you decide to sell. It’s hard to compare selling your handmade items on Etsy and dropshipping a number of different items that are produced inside or outside the country on Amazon, eBay, Shopify and other platforms. As we are talking about the best accounting software for dropshipping, let’s quickly recap how it functions.
Dropshipping is a popular business model also defined as a form of retail business, in which the seller transfers customers’ orders directly to the dropshipper who fulfills the order and ships it to the customer. This essentially means that you are running an online store without stock. Your responsibilities as the seller are marketing and selling the product at your online store, while the dropshipper (whether a manufacturer or wholesaler) takes the responsibility for creating, procuring and shipping the product to the customer.
The dropshipping model can be represented as a sequence of steps, which may vary a bit from platform to platform:
- The Seller signs an agreement with the dropshipper and sets up their online store.
- The Customer orders online.
- The Seller receives the order.
- The Customer receives an order confirmation.
- The Seller forwards the order to the dropshipper who charges the seller a price for the product sold, normally wholesale plus a dropshipping fee.
6.The dropshipper packages the goods and ships them directly to the customer.
- The Customer receives their product.
When you choose the dropshipping model for your e-commerce store, the second step would be determining which e-commerce platforms support dropshipping and whether you’re going to have more than one store on different platforms. Starting a dropshipping business may seem super simple, but there are some things to think over.
Benefits of accounting software for a dropshipping business
According to Forbes Advisor, the most obvious benefits of using accounting software are the following:
Saving time. Automation of accounting software allows saving time on repeated and time-consuming tasks like creating journal entries and reconciling statements.
Compliance. Many accounting software programs have features that will make your business compliant in terms of tax preparation and reporting.
Integration. Good accounting software programs provide multiple integrations with other business applications, such as marketplaces, payment platforms, CRMs.
Mistake reduction. Accounting software helps to reduce mistakes by automating repetitive tasks and providing real-time insights.
Round-the-clock access. Cloud-based accounting software provides the necessary freedom in terms of time and place of access, which is absolutely necessary when you travel for example.
Affordability: Prices for accounting software vary and there are some free options too, so it can fit any budget.
There are some more important benefits to add, according to business.com:
Accurate control of your finances. Accounting software allows you to keep all your financial data in one place, which enables you to see the performance of your business in real time.
Tracking expenses. Automation of expense tracking helps prevent cash flow shortage and make the necessary adjustments timely.
Reporting and analysis. A lot of accounting software offers some analytical functions or reporting, which gives you valuable insights into your business processes.