Pros and cons of dropshipping
Dropshipping lets you sell and ship items you don’t keep in stock but want to sell and ship. Wholesalers and manufacturers offer services like making products, storing them, and moving them. The process involves:
- Order Coming In
- You give your provider an order.
- Your vendor keeps their word.
Using dropshipping has both good and bad points. In the next part, we’ll talk about both of them.
Low investment at first
Stocking in a warehouse can be very expensive. If you use drop shipping, you won’t need as much money to start your business. In the dropshipping business, you can start a business with no initial stock investment and start making money immediately.
If you have things to store, they will cost you a lot of money. You might end up with too much stock and have to get rid of some of it, or you might not have enough and run out of a product, causing stockouts and lost sales. If you use a dropshipping service, you can focus on building your business where it matters.
Order processing at a low cost.
Order fulfillment includes managing the warehouse, keeping track of and labeling items, picking, packing, and shipping. A third party handles drop shipments. Their job is to wait around for you to send them customer orders. They will take care of every other detail.
Make more money and reduce possible risks.
Dropshipping eliminates the need to keep physical stock of products, so you can update your stock more quickly and for less money. If an item is selling well for another merchant or reseller, you don’t have to wait for it to arrive in your warehouse before selling it. Dropshipping lets you try out new products without having to keep many old ones on hand. Get just a commission on sales.
No control over Order processing and time-to-shipment accuracy
Even if you don’t keep inventory, unhappy customers still cost you money. Your vendors take care of and ship all of your inventory. If something goes wrong, customers will complain and may switch to a competitor. Use reliable suppliers to get your drop-shipping business going.
Heavily reliant on a stock that someone else owns
With drop shipping, you can quickly add new products or get rid of ones that aren’t selling well. One drawback is that you don’t get to choose what your supplier stocks. In that case, you quickly leave. Because of this, the lead time gets longer, and customer satisfaction decreases.
The actual “cost” of dropshipping is the discount you get when you buy in bulk. Ultimately, you’ll make less money because your products will cost more. When you use a dropshipping service, you have to sell more products than if you kept them in a warehouse.
Customers will hold you responsible for any problems your suppliers cause with delivery time, quality, or mistakes. We’ve already talked about the problem with how and when orders are processed. But that’s not the whole story. If you don’t handle your inventory, you can’t offer the same level of service as a store that does. If you don’t keep an eye on your stock, you can’t serve your customers quickly. You have to work with your suppliers. This “man in the middle” approach to solving customer problems can cause problems with suppliers, who may be slow to do what you want, and customers (who may grow impatient while waiting for their issues to be resolved).