In other words, dropshipping is a fulfillment method in which an order or shipment is forwarded as a request to a vendor or manufacturer instead of sending the customer items from their inventory.
What is dropshipping? When it comes to dropshipping, there are two ways you can get involved. As a retailer, you can pass orders to suppliers for shipping or become a dropshipper yourself, holding inventory, receiving orders, and shipping items on behalf of another retailer.
This article focuses on a retailer using a drop shipper to get the goods in front of the customer.
Whether used as a company’s primary fulfillment method, a lifeline when inventory runs low, or a means of testing new product lines, dropshipping has been seen more and more over the years; Merchants aim to do more: automatic search for business models.
Advantages of Dropshipping
Many dropshipping pros focus on how easy it is to set up and how it can save money in some key areas of your retail business. Think about these benefits of dropshipping.
No need to pre-purchase or store inventory
The net effect of dropshipping is that you never touch the product. This means there is no need to pre-purchase inventory or facilitate storage, packaging, and shipping.
So you can use it to try out new products you need to be 100% sure about or as a fallback if you sell more than you have in stock.
Many companies are starting with a dropshipping-only model. This is because it’s easy to start, and you don’t have to worry about where to store your goods.
Once your niche is defined, you must find suppliers offering good dropshipping services.
You can start searching on Alibaba.com or Google. Also, if you know someone who can already provide this service, you can start searching.
Disadvantages of dropshipping
Dropshipping is an easy and great way to start or grow a business, but like anything else, it comes with consequences such as:
It can be more expensive than traditional retail stores
What can’t you love? Well, all this comes at a price. The biggest economic drawback of dropshipping is low margins.
Suppliers often charge a premium to brand their packaging with the brand they want. Planning should seriously consider the following:
Could you raise prices and alienate new and loyal customers? 2.
Limited control over quality and branding
Aside from the costs involved, the real killer for some retailers is damage control. This means acting as an intermediary if there is a quality issue with the product or delivery.
Switching between your company and another supplier(s) can cost you and your team a lot. Not only does it mean extra work, but it can also cause customer satisfaction issues.
Delivery problems may occur.
We’ve already discussed the complexities: For example, a customer’s order may be shipped from multiple suppliers at different times and by different carriers. But what about shipping?
If you work with multiple suppliers, it can be difficult to track the shipping charges each company charges and how much you should charge without scaring your customers.
It would help if you either increased your shipping costs accordingly or included some of the cost in the product price, so your margins aren’t hurt too much.