Are you still in the planning phase to launch your brand overseas and are looking through various alternatives to build your logistics network? Drop shipping is quite popular with many online sellers as it takes lots of work away from you so you can concentrate on selling instead of spending time on packaging and shipping.
But there are some downsides & upside to drop shipping and these will affect the new sellers. Well, today we are back with an exhaustive post on, “Drop-Shipping and its pros and cons”.
Ideally, you should never start selling cross-border without conducting a proper market research and working out various alternatives through which you will deliver the shipments to your customers.
Here I am going to list pros and cons about drop shipping so if you considering selling online for profit you can make the correct decision if drop shipping is right for you. Now let’s find out what exactly is Drop-Shipping in some detail.
What is Drop Shipping?
According to a source, “Drop-Shipping is a retail fulfillment method where a store doesn’t keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer. As a result, the merchant never sees or handles the product.”
In other words, drop-shipping refers to the method of selling where the seller/merchant does not maintain any inventory himself and instead purchases it from any other third party to fulfill his requirements and orders on time.
Drop shipping is definitely an option you want to consider if you’re planning to start an online retail business without all the hassles of inventory and product delivery. Most drop shippers’ process is the same and therefore we can tackle the pros and cons of drop shipping.
Check this awesome Infographic “What You Should Know About Online Shoppers“
One of the biggest advantages of choosing drop shipping is that the seller does not have to maintain a large inventory due to which capital requirements are quite low. Since the product is directly delivered from the supplier to the customers you do not have a need for storage this means more savings and better profits for you in a long run.
Ease in Running
It is very easy to start a business when you don’t have to worry about the inventory problems such as maintaining a warehouse, shipping the orders, tracking the inventory to check what products are out of stock, handling returns and other defected shipments. There isn’t a risk of purchasing thousands of units of a product and realizing that you’re not able to sell them because the consumer demand is insufficient.
As drop-shipping eliminates the need for maintaining an inventory or having a brick and mortar store, it decreases the overhead costs of your business by a notch and helps in maximizing profits. You don’t need to set aside room for your merchandise, or secure warehouse space to store it.
Can be Located Anywhere
You can run a drop-shipping business from almost anywhere on the earth, given that you have adequate internet and phone connection to connect with your suppliers and customers to carry out your business’ day to day activities effectively. So, this factor is also the great advantage of Drop-shipping.
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Since you don’t maintain a fixed inventory under drop-shipping business, you can get access to a wide variety of products by getting in touch with different vendors and therefore, offer a wide variety of products to your customers to choose from.
Drop shipping is quite popular with many online sellers as it takes lots of work away from you so you can concentrate on selling instead of spending time on packaging and shipping. But there are some downsides to drop shipping; these downsides mainly affect new sellers.
As lucrative as not maintaining an inventory sounds, sometimes having one is easier and more convenient. This happens because of the fact that the supplier who supplies products to you also supplies to a lot of different vendors and sometimes, suppliers don’t always support the technology that is required to run a drop-shipping business successfully.
Procuring different products for a single buyer from different suppliers also leads to multiple shipping costs. However, the burden of these costs cannot be shifted onto the customers as they don’t really understand the mechanism and end up thinking that they are being charged inadequately. so, it’s quite complicated.
Sometimes, you may also get held responsible for no mistake of your own especially if your supplier ends up supplying low-quality materials or wrong shipments. This can at times, also strain your business’ reputation.
Check this “Things to know about Cross-Border E-Commerce“
If you evaluate the above advantages & disadvantages carefully, you’ll realize that drop shipping is undoubtedly a viable option for the small business retailer. Large retailers, on the other hand, will have enough resources like capital to use the wholesaling model for their business.
Thanks for reading it. Hope you all liked this.