Have you ever heard of a business model where you can sell your ecommerce products without having an inventory? That’s called dropshipping. In other words, it means you sell and market the products, but you are not part of any order fulfilment process yourself.
Dropshipping has its own positive and negative sides like every other thing in this world. Let’s dive into the details!
The Good Part:
1. No Upfront Costs
If you are new to the eCommerce business, it is easy to step into dropshipping because of the low starting costs. You won’t need resources for the inventory which means you can basically start without the money.
2. Quick Start
As mentioned before you don’t need an inventory to have a dropshipping business. That means you can start your eCommerce business right after you have finished with your business webpage.
3. No Stocking Fees
Some products are really expensive to store. For example large and heavy products or the ones that need special conditions. That’s when dropshipping might become handy.
4. Implement New Products
You feel like adding new products to your store but don’t have enough time? You don’t need time for that with dropshipping cause the only thing you need to do is adding these to your store and customers can already make a purchase. With dropshipping, it is easy to test new products.
The Rough Part:
1. Standing Out
There’s no doubt that as a beginner in the dropshipping business it is difficult to stand out. Without a well-known brand and marketing experience can be challenging to make customers choose your products over well-established competitors.
2. Low Margins
Before you start with dropshipping, be advised that the enormous profit won’t be happening overnight. Gaining significant profit with dropshipping takes time. Margins are usually 10%-30%. The more money you put in the more money you will get out. The same goes for every other business model at the first stadium.
3. No Supply Chain Control
If something goes wrong in the supply chain, you will be responsible because clients will contact directly you. And when something goes wrong there is basically nothing you can do about it. The only trick that can actually help is an excellent customer service.
4. Refunds and Returns
Dealing with refunds and returns can be quite stressful. The biggest help in those situations is great communication with the clients. Since you are not the one dealing with product fullfillment, you are the one dealing with the refunds and returns.
These are the most extensive aspects of dropshipping. The main fact is that you don’t have to own inventory which makes it perfect for starting out without an investment, however, other aspects of dropshipping can cost you later a lot more. Shoperb recommends you to think twice before you agree on your shipping and inventory choices. In our opinion, peace of mind probably comes from having an inventory in your own control but choice is yours!