Dropshipping has become a very popular way of starting an online business. But many beginners often ask the question, is dropshipping a good idea? Well there are many advantages of dropshipping which we will explain in this post. Along with a few disadvantages. We’ll take a look at these dropshipping benefits so you can decide if it is something worth pursuing.
What Is Dropshipping?
Dropshipping is a type of retail fulfilment method that differs to traditional retail strategies. Retailers usually order stock from a supplier, store it in their warehouse and then ship to customers.
Dropshipping cuts out the inventory management part of this process. Instead items are shipped directly to the customer from the supplier. This means you do not handle, store or ship the items, it is done for you by a third party.
The dropshippping process is very straightforward and happens as follows;
- Customer places an order via your website.
- You order this product from a supplier.
- The supplier ships this order direct to your customer.
You can read our full guide to how dropshipping works.
Advantages Of Dropshipping
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Low Start Up Costs
A dropshipping business can be started with little to no initial cost. There is no inventory or premises to pay for. You only order items with the supplier once you have first received an order from your customer. This keeps cash flows simple and manageable.
Usually the only initial costs of dropshipping are spent on marketing or a hosting plan on an eCommerce platform.
One of the biggest advantages of dropshipping is that it offers the ultimate in flexibility. Thanks to being operated entirely online and no management of inventory, you can operate it from anywhere. Whether that be at home or on vacation. As long as there is internet access you can run a dropshipping business.
No Physical Inventory
Not having to manage physical inventory saves both time and money. You do not need to worry about hiring premises or handling, packing and shipping products. All this is taken care of by the third party supplier. The time and money this saves can be used towards growing your business.
Dropshipping stores are easy to scale when compared with traditional retail businesses. This again is largely down to the management of inventory.
Usually more orders means requirements for more storage space, more equipment and more staff to handle shipping. But as all of this side of the business is handled by your supplier so it doesn’t create an extra burden on you.
It makes little difference to your workload whether you receive 1 order or 1000 orders.
Although hard work is still required, many parts of the dropshipping model can be automated. There are automation tools that can take care of sourcing, listing and ordering products on auto-pilot. This can help free up a lot of time.
Wide Product Range
You probably notice a common theme here about the benefits of not handling the products yourself. It has yet another advantage of being able to offer a wider range of products than a traditional retail business.
Traditional retailers usually have to order new stock and then pay to store them in a warehouse until shipped to customers. This can limit new product ranges they carry due to the costs and storage space required.
You don’t have this issue with dropshipping as the supplier carries the products. This allows you to list almost anything on your store at no cost. It is a good way to trial new products with no risk. If they don’t sell well, just remove them.
Low Barriers To Entry
Having low barriers to entry is one of the main advantages of dropshipping. It is a very accessible way to start an online business for many people. The business model is simple to understand, it is easy to start and offers great flexibility.
Added to this, it is very inexpensive to set up with no commitment involved. You don’t need to spend large sums of money to get started, which makes it very low risk. If you find your dropshipping store doesn’t work or you don’t like the business you can stop whenever you feel like.
Is Dropshipping A Good Idea?
So now we’ve seen some of the advantages of dropshipping, is dropshipping a good idea? It does offer some great benefits over many traditional types of business. However, there are some disadvantages of dropshipping we should also mention below.
Disadvantages Of Dropshipping
Lack Of Control Over Products
As you don’t see or handle the products, you are reliant on the supplier. This gives you little control over product quality. Sometimes the same product can differ widely in quality between suppliers.
A common tactic is to just purchase from the supplier with the lowest cost. But if the quality is poor it can result in less customer satisfaction and higher refund rates.
It is worth shopping around between different suppliers. Ensure you read reviews from other customers. It is also beneficial to purchase the product yourself to test it first.
There are some dropshipping tools that can help with this issue. For instance SaleHoo Dropship is a tool for sourcing only pre-vetted high quality items from AliExpress straight to your Shopify store.
Difficult Customer Support
Customer support can be a little more difficult due to suppliers being the ones shipping the products. Queries from customers regarding deliveries or defective items means you may have to work with the supplier to resolve the issue. This can prove a bit of a headache as you are acting as an intermediary between the customer and the supplier to resolve the issue.
Depending on what niche you operate in competition is likely to be high. A lot of dropshippers start out by selling similar types of products. Increased competition often results in competitive pricing tactics or switching to inferior products. Both of which can reduce profits.
Advantages Of Dropshipping Conclusion
Dropshipping is a very simple to understand business model. It cuts out the inventory management aspect for a retailer. Instead a third party supplier handles and ships the products.
Not having to store, handle or ship products means there are lots of advantages to dropshipping. This includes low start up costs, flexibility to work from anywhere and wider product ranges.
Dropshipping also has a few disadvantages including lack of product control, difficulties providing customer support and increased competition.
So, is dropshipping worth it? We think so due to the low barriers to entry and little costs involved to start. If dropshipping is something that interests you then we’d recommend you give it a try.
Although we must warn it isn’t as easy as many ‘experts’ on social media make out. These people are often just selling worthless ‘training’ courses that offer little value.
But you can create a profitable and successful dropshipping business if you prepare, dedicate time and work hard.
Would you like to learn more about how to create a successful dropshipping store? Then the only courses we’d recommend are from SaleHoo Educate. These courses are provided by actual experienced dropshipping experts, from one of the highest rated dropship services on TrustPilot. Not some random guy on TikTok.
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