A Killer Business Model You Can Start With Little Or No Money
This business model has been practiced for a long time in Africa. The mode of carrying out the activity itself may have changed due to improvements in technology, especially the coming of the Internet. You may not agree with me that it is dropshipping I am talking about. My intention is not to give a name, but to explain a business model that has been successfully practiced in Africa for a long time.
What is dropshipping?
Some of you may be asking yourself what this dropshipping is all about. It is simply a retail-like business where the owner of the business doesn’t keep any stock but sells products.
How will someone do that? Sell a product without having any stock? It is easy as in the the owner of the dropshipping business acting like a ‘go-between’ the buyer and the seller.
What happens is, you purchase the product from a third party and it’s shipped directly to the customer by the manufacturer or stock owner. The dropshipping model is slightly different from the Internet retail business model like that of Amazon, Jumia, etc.
However, some of these Internet retail businesses do give entrepreneurs the possibility to dropship on their sites. For instance, it is possible for you to dropship on Amazon through the Fulfillment by Amazon [PBA] program.
The dropshipping business model
As said above, the dropshipping model allows one to sell products without keeping stock or shipping the goods. In effect, it is a process whereby the seller is responsible only for selling the product and not the inventory or shipment of the goods. The manufacturer of the product is therefore responsible for manufacturing the product, carrying inventory as well as shipping the goods to the buyer.
In Cameroon, Jumia, the largest Internet retail business, is doing something very similar to this. However, there is a slight difference in that Jumia actually does the shipment even though they don’t manufacture or keep any stock. In a nutshell, Jumia is a market place where vendors and clients meet. They serve as an intermediary.
This other business model that is similar to dropshipping in Africa
Coming back to what I said above about a business model very similar to dropshipping in Cameroon. It may be surprising to you also like me when I first learned about it.
In Africa, it is common to see hawkers carrying wares around the town – electronics, plumbing & electricity materials, house cleaning equipment, etc. Did you ever know that some, if not most of those selling these wares don’t actually own their stock?
What they do is they subscribe (only that this is done physically) to the shop of someone who retails or does wholesale of such materials. Since these merchants need to extend their market outlets, these set of entrepreneurs put themselves available for them to use as an outlet.
They are given wares to hawk around town at their own price given they had an agreed price with the merchants. At the end of the day or week, they come back and balance their accounts.
Now the similarity with this and dropshipping is that the hawker actually owns no stock, even though he moves around with stock to sell. Since dropshipping is mostly done online, they don’t need to move around with the stock on their heads. What they do is they advertise online using pictures of the product. Once there is a buyer, they ask for the merchant or manufacturer to ship the goods.
Offline, one common practice in Africa that is similar to dropshipping is the act of moving around like a middle man. The owner of the business is aware of the existence of a product and has negotiated with the manufacturer. He then moves around looking for a customer which if seen, he will purchase the goods and the manufacturer will deliver directly to the customer.
This is very common in the wood business in Cameroon, especially those carrying out logging activities. Go to Yassa in Douala and you will see so many of such guys around. Some of them use the Internet as they snap the pictures and send using message apps like WhatsApp, Telegram, WeChat to their prospective clients with their own price. Once the client places an order, he then gets to the wood owner who will redirect the truck to the customer’s park.
One thing you need to know about dropshipping is that you can do it on a personal bases as well as do it with an Internet retail business. In Cameroon, Jumia has given the possibility for people to sell on their platform using Jumia Market Place.
You should not also confuse dropshipping with Affiliate Marketing. I will be sharing with you updates on how to be an affiliate marketer on Jumia as well as on how to start your own online shop on Jumia Marketplace. It will be fun when making money. So keep visiting OpenHub Digital for updates.
Don’t hesitate to share this with others. You don’t know who may need just this knowledge to start a business or who may want to use it for a part time business. Sharing is caring! Leave a comment below if you have one.