The world of eCommerce has developed.
A lot and a lot of retailers have dived onto the eCommerce bandwagon which has resulted, in creating more competition for consumer transactions. This result as we have seen different types of online retail springs up, which includes dropshipping.
In case you haven’t heard of it before, the Number one question people ask is, does dropshipping work? And is it a good business decision?
WHAT IS Dropshipping?
Dropshipping is an order fulfillment method that doesn’t require you to keep goods in stock or in the warehouse. But, You sell the item and pass on the sales order to a third-party person called supplier, who then ships the item to your customer.
Contrary to trending belief, dropshipping as you know it, isn’t a get rich quick scheme. So, it requires your patience, dedication and hard work.
Because, it looks like quick money — sell other people’s product and take a cut for yourself — but when you figure out all the obstructions, drawbacks and daily management, it’s far from easy
As a first time person in Dropshipping business, This might be the first time you are coming across the term dropshipping. You may be wondering if it’s really a scam.
So Here are some of the Pros and Cons of Dropshipping?
Pros of Dropshipping
- No inventory Needed
Note, managing your inventory is a major task. Not only do you need a warehouse for your goods, You have to track your inventory and always maintain quality, As a small business owner, this might be a hefty task for you. By taking these responsibilities, you will have more time to grow your business.
2. Reduced overhead
Stocking goods in large quantities can get you into spending more. Most retailers stock up goods in big quantities to get the perfect price and increase their profit. These process of stocking up goods need large sums of up-front cash to start which weigh on a business. In Dropshipping, all these are not needed.
3. Low-Risk Management
When stocking up many goods, there is a lot of pressure for you to move all of it. Unsold and Damage products are money lost for the seller.
In dropshipping, the risk factor is removed and you only pay for what you sell. Retailers are free to update their store with new products and keep their online store based on customers’ demands
Cons of Dropshipping
- You have Less control
The time you hand over the shipping process to a supplier, you have already lost some control which comes with a hefty dose of risk. If the supplier makes an error it will reflect negatively on your business. This is why it’s very important that you work with a supplier that has high reviews and positive feedback from other buyers
2. Reliance on stock
While one of the advantages of dropshipping is that you are always free to switch over to customer demands without any limitation, it also means you are conditioned to a sudden shortage in stock. If a product becomes popular over a long period of time, you might miss out on selling it because your supplier has nothing stock.
Finally, since dropshipping allows you to use many different suppliers, you can always find the best supplier for a product that you need. For example, you don’t have to deal with one supplier when you have several suppliers. You will have to focus on getting the best suppliers.
Because you’re dealing with a large number of potential customers, you will get to benefit from the attention of your potential customers. In other words, you will get to be a customer to your supplier.
What’s more, because you’re dealing with multiple suppliers, you will be able to build relationships with them. If you deal with only one manufacturer, you will be limited to just one supplier. By dealing with multiple suppliers, you will be able to get better deals from them.
Another advantage of dropshipping is that you don’t have to pay sales representatives. You only have to pay the payment processor to handle the payment process. So, no sales representative would be calling you to ask for money.
To sum up, dropshipping provides several advantages to a retailer. By using dropshipping, you get to avoid the problems associated with inventory, you get to deal with multiple suppliers, and you can build good relations with your suppliers.
Pros Dropshipping and Cons Dropshipping