The Advantages and Disadvantages of Drop Shipping
There are more entrepreneurs today than ever before looking for ways to start their own online businesses. With the rise of drop shipping, it has become easier than ever before to get into eCommerce with little money and no product.
Many people like the idea of starting their own business in hopes that they can build something with it someday if they want to leave their current job.
Others will attempt to make a quick buck through drop shipping, and not really understand what they are getting themselves into unintentionally.
Today I am going to go over the advantages of starting your own drop-shipping business and some disadvantages of doing so.
There are several advantages to starting a drop-shipping business: you don’t need a lot of money, you don’t need to store or ship any inventory, and it’s a low-risk business model.
You can effectively start your own drop-shipping store through platforms such as Shopify in a matter of hours if not minutes.
No product is required for this business model so anyone can do it with little to no capital. This is not always the case for other types of businesses.
To start a drop-shipping business, you simply find products through sites like Alibaba or AliExpress which are wholesale suppliers that ship directly to your customers.
You have no product sitting in inventory so the risks are much lower to starting this type of business.
The margins on these items will be lower than selling an item in-house, but the ease of buying and selling online makes this business model extremely profitable.
You can also build your own website which will allow you to add your name and brand to the product, minimizing the risk even further. If you’re interested, here is a detailed guide to dropshipping.
Dropshipping Disadvantage
While many consider drop-shipping to be one of the main strategies for the growth of an e-commerce business, others look on the darker side of things.
One disadvantage of starting a drop-shipping business is that it takes some work to get the relationships with suppliers going.
This is one of the most time-consuming parts of running a drop-shipping business, but it can be done in a short amount of time if you have the patience and know-how to work with suppliers.
Once you have established a relationship, it really just comes down to finding products that are selling well through marketplaces on the internet.
Another disadvantage is you have to pay for your website hosting and monthly fees, but this is something most businesses will incur anyway.
The main reason why people do not like drop-shipping is that they are under the wrong impression that it is easy money.
They think they will set up a store, find which items are selling well, and just sell those items to make a profit.
This is not how it works. While you do not necessarily need to put in much work, you will have to spend time researching products that are trending online, finding suppliers for these products, getting the product into your store, and marketing this product so consumers can find it on your website.
This is the main reason many people say drop-shipping is not a business, but more of just a hobby.
Even though there are disadvantages to starting a drop-shipping business, they can be mitigated easily by anyone with enough patience.
If you want to start your own online store and sell products with no inventory risk involved then drop-shipping is definitely the way to go. Just be sure you are doing it for the right reasons, and not just because everyone else is doing it.
If you want to make a lot of money online with little work involved, then this business model will probably frustrate you in the long run.
If you are a bit confused and have no idea where to get started then I must recommend checking out popular dropshipping YouTube channels like Ecom-King (Kamil Sattar).
He is one of the guys who is sharing valuable and practically created every campaign on his YouTube channel. He has been into dropshipping for over 7 years.
Why Use Drop Shipping in Business?
The main disadvantage of dropshipping is that because you never actually own the products you sell, if your supplier suddenly disappears (due to bankruptcy, for instance), it’s likely that your customers will receive their orders very late or not at all.
While most reputable suppliers list an “order tracking” phone number in their ads, handling breakages and complaints can add to overhead costs that could have been avoided by using an in-house fulfillment method.
What are the Disadvantages of Dropshipping?
Most drop ship companies claim to care about their customers, but it is difficult for them to give you personal attention to every shipping issue that arises.
Many retailers report shipping delays and breakages because they lack direct contact with their suppliers, and it is very difficult for dropshippers to investigate and correct such problems.
What is the Difference Between Drop Shipping and Reselling?
Resellers purchase merchandise from a variety of wholesale distributors or manufacturers and then resell the goods to the public at highly marked-up prices. Resellers offer no service other than purchasing their products.
In contrast, drop shippers sell the products of other manufacturers or third-party suppliers and then deliver those goods to their customers.
Dropshippers usually provide excellent customer service as well as additional selling tools such as product photos and websites.
Conclusion:
Dropshipping is a great concept, but you have to be smart about it. Just because retailers are able to use this business model doesn’t mean they should.
For most people, starting your own online store is the way to go if you want to start an internet business that will grow into something more than just a side project or a hobby.
However, if you are part of a small niche market and if there is a huge demand for your products then drop-shipping might be a great alternative to setting up your own store.
Just make sure that you know going into this business that it will be tough work and it may not always go smoothly.
