What is Dropshipping? The Pros and Cons You Need to Know
There is a lot of talk about Dropshipping on the internet, but not all of it is accurate, nor is there clear information on what is really involved in running a Dropshipping business.
Dropshipping is an eCommerce business model that allows you to sell products from an online store of your own or a marketplace like Amazon.
Drop-shipping has now become an essential requirement in the world of online business. If you purchase any items from an online store or retailer, you might have encountered the term “dropshipping.”
In dropshipping, a product is purchased from a third-party supplier and then shipped directly to the end customer. So, problems like storage and maintenance of the product are not an issue. And that’s what some online businesses do. In this way, the merchant need not fulfil the inventory items. Instead, the third-party supplier gives the product in good condition.
Is Dropshipping useful?
Drop-shipping is much more effective as compared to the traditional retail method. In the traditional retail process, the goods are first taken from a supplier and then stored in some warehouse space; after that, the product is delivered on an order basis to the customer. Hence, dropshipping is useful for entrepreneurs as it does not require the traditional retail method.
Drop-shipping is economically feasible; in other words, this requires less investment to start the business. You can also make large profits, as you are directly getting a cut from customers. Major companies like Flipkart and Amazon do Dropshipping. But the seller has a choice between a one-ship and inventory-based model (basically the stock of items).
The Advantages of Dropshipping
It can be as simple as starting an online store and simply using Amazon.com to fulfil orders. Or you can be a marketer and find a niche product that other companies are willing to purchase. Some key benefits of dropshipping are:
- Starting with less investment
- Easy to begin.
- Easy to handle business.
- Ensure the growth of the business if the service is satisfactory.
- Flexible in demands,
Easy to Setup and Learn
Dropshipping is very easy to start; you don’t need to learn everything or do some master in it. You can learn many things as you go along with it. However, getting some basic ideas about business could give you a good knowledge of the company. You can start dropshipping as early as today. Only good resources and some basic knowledge are enough to know.
Dropshipping is the perfect business model for new eCommerce entrepreneurs. It’s simple to set up and manage and doesn’t require a large up-front investment. You can also run your dropshipping business in your spare time – you don’t need to quit your job to start a successful store. Plus, there are several dropshipping tips you can apply to drive traffic to your store.
Major Risk Associated with Dropshipping
- You need to have control over the product, as it can become difficult to manage all the orders.
- Tight margins are present over the price and quality of the item.
- Risk is associated with the delivery of the product, as for any tampering, your brand might be blamed.
- You need to have good customer service.
- Processing all the orders can sometimes become complicated or too much to handle properly
Unexpected Cost Increase
Dropshipping can become difficult to process, as each supplier uses a different method for shipping the item, which could delay the shipment and thus trouble your customers. Sometimes the cost can increase unexpectedly. Billing and processing thing is another problem that may arise. Hence, you need to have a great conversation with the supplier for proper procedure.
No Control Over Product
You don’t have much control over the product, as your supplier is doing everything to deliver it. The lack of control over your product can sometimes impact your brand, so you must be careful while dealing with it.
Customer Service Issue
Customer service can also become hectic, as you have to keep informing them about the product-related services, issues, and updates with its shipment. Even if anything goes wrong, then you will be blamed for it. And if everything is going right, then your supplier might raise an issue with your product. Hence, communication has become essential.
One of the cons is that there is a lot of competition in the dropshipping industry. You have to work hard to stand out from the competition and attract customers. Another con is that you must be careful about the products you choose to dropship, as not all products are a good fit for this business model. Finally, it can be difficult to scale up your business if it becomes successful since you will need to find new suppliers who can meet your growing demand.
Can I earn from Dropshipping?
The answer is YES; many successful dropshipping business merchants earn over six digits of money. At first, you might make a small amount. But don’t worry. With an increase in customer trust and growth in the sale of items, your profit can skyrocket.
You must also maintain good relations with customers and suppliers, as they are the key agents for business. Hence, excellent customer service could raise your brand name, trust, and values.
How to Find Dropship Suppliers?
Dropshipping is a great business model that enables entrepreneurs to start a business with little up-front investment and few risks. When done correctly, dropshipping can provide a high-margin income stream with minimal work. The first step in starting a successful dropshipping business is finding a reliable and reputable dropshipper. There are many ways to find potential suppliers, but the best way is to use an online directory.
One of the most popular directories for finding dropship suppliers is SaleHoo. SaleHoo has over 8,000 verified suppliers and provides access to detailed information on each one, including pricing, shipping policies, and minimum order requirements. Another great resource for finding dropship suppliers is Oberlo. Oberlo allows you to easily find products from AliExpress that you can then add to your store with just a few clicks.
Dropshipping is a business model in which an entrepreneur sells products directly to consumers without having to go through a wholesaler or distributor. The main pros of this business model are that it’s low-cost and easy to set up, and you can make a great deal of money with dropshipping. However, some cons to consider before starting out with dropshipping, including the fact that it can be difficult to scale up your business if you don’t have the right tools and resources.