Dropshipping is a form of retail fulfillment strategy. This is where a retailer does not store the items they sell. Instead, they buy the item from a third party and have it delivered directly to the customer. As a consequence the seller does not deal directly with the items.
The difference between dropshipping and the regular retail model is that the inventory is not supplied by the selling merchant.
Why Dropship?
Low Capitol
In order to stock a warehouse it takes a lot of money. You can eliminate the risk of getting into debt by using dropshipping to start your company. You can start a dropshipping company with zero inventory instead of purchasing an extensive inventory and hoping it will sell, and start making money immediately.
Low Inventory and Overhead Costs
Since you don’t have to handle products or manage a warehouse, the operating expenses are very small. Indeed, many successful dropshipping stores are run as home-based companies. As you expand, those costs are likely to increase but remain small relative to conventional brick-and-mortar businesses.
Cheaper To Ship And Package
Usually, order fulfillment requires you to warehouse, arrange, log, mark, and pack and dispatch your stock. Dropshipping lets a third party take care of everything. Your only role in this arrangement is to ensure that they get orders from your client. They’ll do everything else.
Flexible Time And Location
With an internet connection a dropshipping company can be run from just about anywhere. As long as you are able to easily interact with suppliers and customers, you can run and manage your business.
Sell And Test Products With Ease
Without the limitations of a physical warehouse and the associated costs, dropshipping allows you to upgrade your inventory quickly. Thus you can instantly give your customers a product without waiting. Dropshipping helps you to check new products without bearing the burden of expired inventory. You pay only what you’re asking for.
The Drawbacks
Low Margins
Lack of bulk pricing is the drawback “fee” of dropshipping.
You’ll probably pay more for each item you sell compared to paying less for a large inventory of goods – which would result in less income. If you want to use dropshipping to gain a lot of money, then you would have to sell more goods than you would otherwise have if you owned and warehoused them yourself.
Unreliable Stock
An significant advantage of dropshipping is being able to deliver new goods immediately or to avoid selling slow-moving items. The downside to that perk is that you are not managing the inventory of your supplier. When stock runs out, You run out of money. This would lead to longer waits and consumers missing out.
Less Knowledge, Poorer Customer Service
If your manufacturer delivers goods late, breaks them, supplies the wrong things, or somehow ruins the order of your client, you will be called down by the consumer.
You won’t be able to retain the personal contact that consumers will get from retailers who handle their own products. Without supervising the product yourself, you won’t be able to fix customer problems easily – you’ll have to work with your suppliers to fix your customers problems.
This way of serving your customers will lead to issues with your vendors and with your consumers, who can soon grow sick of waiting long for their issues to be solved.
Overall
Dropshipping is promoted as a risk-free marketing strategy. And it’s true that the upfront risk is very low, because before you start selling you don’t have to buy inventory. Fiscal risk is implicit in all industry, however, and dropshipping is no exception.
Hello there, This is an awesome article that you have got here. Dropshipping is a risk free marketing strategy and it is totally cheap to carry out. It is a process where an individual stand a as a middle man to purchase and deliver a product to the customer that requested it. And does not require large capitol to begin.
Thanks for sharing sharing this with me. I look forward to starting my own dropship company.
This was a very great article about dropshipping. I was testing it out when I first started my online journey. Unfortunately it was before I stumbled upon Wealthy Affiliate and became a premium member there. My dropshipping career ended quickly.
I got couple of sales, but with two of three sales I forgot to incorporate shipping cost! Because the margins are so low I ended up loosing money.
As this wasn’t enough I had to email back and forth with impatient customers. With the knowledge I know today I think things would be better, however I strongly doubt I will begin with dropshipping again.
As a new business owner, I have been looking into dropshipping. I really appreciate your post because you explained the meaning and process in thorough detail.
I also appreciate that you listed the drawbacks. I personally like knowing the pros/cons of anything I want to invest in. This helps me to make the best decision for myself.
This is something that I will certainly keep thinking about. I will be sharing this with my other friends who are starting their own business as well.
I suppose this is a kin to affiliate marketing, with an actual product. I have been considering adding some products to my website. So this is certainly good information and I am grateful to have read your post. I didn’t want to add any product until I actually had experience with it, so that I know for certain they are reliable. You have definitely given me some food for thought. Research is probably the best policy when thinking about Dropshipping. Best of luck.
Love, Light and Blessings, Surina
Excellent and breakdown of dropshipping! I kinda knew what it was, but not to the degree that you have explained it. At one point I was approached about doing so in conjunction with other online work I was doing. Now I get the bigger picturea lot better. There are certain pros and cons as there are with any business I suppose. There is always a tradeoff. Do I want to risk more of my money to make more profits, or do I want to do the numbers game of marketing the products while someone with the space to store, the experience to ship, and the reputation to do all of that with integrity handles those details for me? I think I’m more of the dropshipping kind of guy. I plan to check out more of the info on your site!
Thanks,
Darrin
There are indeed variable and lower capital businesses to start out there. I have not known in details what dropshipping means until i came across your article. it is an eye opener for those looking to start business with lesser capital. it is wonderful since the retailer does not need to acquire extensive inventory and does not need to be in direct contact with the seller. Also one needs not to have a warehouse since one can use his family house to do his business. it is really interesting, and the benefits are much. one can begin and grow a business through dropshipping. Also it makes one to have contacts with consumers.
Nice Article!
Helooo dear, thanks for sharing these valuable content with us, I was actually doing some research online when I saw your post, I believe these is exactly what I need to take my business to the next level, I am really glad I got to see these post. Only wished I saw it earlier, bmi believe after going through your article I have been enlightened more, thanks for the info
Awesome review you did put up here on drop shipping….I really have to say that I do appreciate you time and effort put towards making a thorough research on this company and also sharing your candis findings with àll to also learn from…Your post has really gotten the beat part of me and I look forward to hearing more form you…