Dropshipping is simply a method of delivering products whereby retailers receive payment of orders, but buyers get their products directly from the manufacturers. In this case, retailers are the middlemen between the buyers and the manufacturers. They receive orders from their customers and then forward them to the wholesaler who in turn delivers the products directly to the customers. The profit that retailers receive is the difference between the wholesale price and retail price of the product.
Dropshipping has numerous advantages and disadvantages too. If you are thinking of venturing in this business then it is good you familiarize yourself with the benefits you will enjoy and also the challenges you are likely to encounter.
What Are The Pros of Dropshipping?
Low Startup Costs.
One of the benefits of dropshipping is that you don’t need a huge amount of money to get started. You don’t have to worry about where you will get the amount to get started since you only need a few amounts to get started. With dropshipping, you can eliminate the risk of borrowing to start your business. Other than purchasing extensive inventories and hope that they sell, you can simply start your dropshipping business without inventory and begin to earn profits right away.
No Expense of inventory.
With dropshipping, you can always eliminate the costs related to inventory. Maintaining your own inventory would cost you high amounts to get it established. You would likewise incur the cost of organizing and replenishing your inventory as you sell. However, dropshipping allows you to transfers all these costs to the wholesaler. In simple words, it means that you have the inventories of numerous businesses at your disposal, however, it isn’t your responsibility to maintain them.
Take More Risk.
Since you are not overburdened by inventory costs, you can take more risk comfortably. When dropshipping, it is your suppliers and distributors who invest in the items you are selling. You can try to add new products to your online stores without incurring high amounts. If you add new products and find that your customers don’t like them, you won’t be risking losing substantial amounts. You can simply remove these products from your store.
What Are The Cons Of Dropshipping?
One of the disadvantages of venturing in dropshipping business is high competition. Since dropshipping needs only a small amount to get started, numerous individuals are attracted to this business and hence there is high competition.
Lack Of Independence.
When you are in dropshipping business, you are relying on other business to facilitate your business. Since you are putting your business on the hands of other individuals, you will have limited ability to offer customer services for the items you are selling. In case of any issues, you might have to refer your customers to your wholesaler. This can be a lengthy process that can end up discouraging your customers from making future purchases.
In dropshipping business, the wholesaler sells the item you place an order for. There is no bulk buying in dropshipping and hence it means the products are sold at a higher price than it would really be if there was bulk buying.
The above are some of the pros and cons of dropshipping business. Understanding these will help you make your decisions wisely. If you want to get into dropshipping, due your due diligence and look for a course online that can teach you how to do this properly.