Before we get any further, it’s important that you have an answer to the question: what is dropshipping?
Dropshipping is a type of retail fulfillment method. Instead of a store stocking products, it purchases the products from a third party supplier. The products are then shipped directly to the consumer.
For the store, this is a mostly hands-off process. The merchant doesn’t have to
order inventory or fulfill the orders in any way. Instead, the third party supplier takes
care of the product itself.
Dropshipping is great for entrepreneurs because it doesn’t demand as much as the traditional retail model. You don’t have to open a brick-and-mortar store, pay overhead, and stock products. Instead, you open an online storefront and buy wholesale from suppliers who already have products and warehouse space.The merchant is mainly responsible for gaining customers and processing orders in dropshipping, meaning you’ll effectively be a middleman. Despite this, you’ll reap the lion’s share of the profit by marking up the items you sell. It’s a simple business
model and one that can be very rewarding.
Millions of entrepreneurs flock to dropshipping because it requires less hassle and money to get started. That’s probably why you’re interested! And the best news of all? With dropshipping, you can build a business that’s sustainable in the long term
right from your laptop.
Of course, there are many drawbacks and advantages, and it’s important that we look at them before you start your own dropshipping ecommerce business. Once you understand the pros and cons of dropshipping, learning how to dropship effectively will be a breeze.
Benefits of Dropshipping
Dropshipping is easy to start. You don’t need to be a business guru to get started. In fact, you don’t even need any prior business experience! If you take some time to learn the basics, you can get started quickly and learn the rest as you go along.
Dropshipping is so easy because it requires very little from you. You don’t need a warehouse to store products or a team to help you out. You don’t have to worry about stocking or shipping either. You don’t even have to spend a certain amount of time every day on your store. It’s surprisingly hands-off, especially once you get going.
All of this means that you can start your business today. You don’t need to spend months getting everything ready. You can start getting everything up and running within a matter of hours.
You will need some foundational knowledge and the right tools and resources, and that’s why we created this guide. By the time you’ve finished it, you’ll be equipped with the knowledge you need to jumpstart your own dropshipping business.
Dropshipping is easy to grow. As you scale up, your business model doesn’t have to change very much at all. You’ll have to put more work into sales and marketing as you grow, but your day-to-day will stay more or less the same.
One of the benefits of dropshipping is that the costs don’t skyrocket when you scale. Because of this, it’s easy to keep growing at a pretty fast rate. You don’t have to hire a huge team either. Unless you want to assemble a small team at some point, you can do almost everything all by yourself.
Dropshipping doesn’t demand a lot of capital. Because starting a dropshipping business requires so little, you can get started with minimal funds. You can build an entire business right from your laptop, and you don’t need to make any high-level investments. Even as your business grows, your costs will be fairly low – especially when compared to traditional business expenses.
Dropshipping is flexible. This is one of its biggest benefits. You get to be your own boss and set your own rules. It’s by far one of the most flexible careers that anyone can pursue.
You can work from home with little more than a laptop, and you can work at the times that are most convenient for you. This is ideal for entrepreneurs who want a business that works for them. You won’t have to bend over backwards to get things done. Instead, you set your own pace.
Dropshipping is also flexible in that it gives you a lot of room to make decisions that work for you. You can easily list new products whenever you want, and you can adjust your strategies on the fly. If you’re going on vacation, you can automate everything to run while you’re away. You get the idea – the possibilities are limitless.
Dropshipping is easy to manage. Since it doesn’t require you to make many commitments, you can manage everything with little hassle. Like I said, you can do everything all by yourself if you want to. Once you’ve found suppliers and gotten everything set up, you’re mostly responsible just for your online storefront.
Disadvantages of Dropshipping
Dropshipping has slim margins. One of the disadvantages of dropshipping is that you should expect low margins initially. That’s not to say it can’t be profitable, but you should be aware that the product margin in some niches might be small.
This issue is especially problematic when you’re dropshipping in a supercompetitive niche. When you’re fighting for customers’ attention, you can’t afford to make the kind of profits you want to. If you choose the right niche, you’ll see larger margins. In niches with lower competitions, you’ll have better margins, but usually it will only get so good. That’s why dropshipping relies on a fair amount of sales to be profitable.
Dropshipping can make order processing difficult. Dropshipping seems straightforward: the customer orders, you process, and your supplier fulfills. And for the most part, it is simple.
However, if you’re sourcing products from multiple suppliers, you might run into some problems. Each of your suppliers might use a different shipping solution, which presents a problem for both you and your customers. Costs can get high, and shipping multiple products can be problematic.
Different suppliers will also have different structures in place for processing and billing. Since you have to manage the interaction with your suppliers, this can get tricky.
Dropshipping doesn’t give you a lot of control. When it comes to stocking products, order fulfillment, and shipping, things are out of your hands entirely. One of the disadvantages of dropshipping is that you don’t have much control over certain aspects of the dropshipping process. You have to rely on your suppliers to do everything right and work seamlessly. This lack of control can be off-putting to some entrepreneurs, but it usually isn’t a problem.
This just means that when something goes wrong, it can be tricky to manage. When everything goes well, it’s awesome. But when supplier problems happen, you just have to wait for them to be resolved. This can sometimes cause customer retention issues, but with the right damage control, you can mitigate the problems and keep customer churn to an absolute minimum.
Dropshipping makes customer service more challenging. This is another problem that happens when orders go wrong or suppliers fail. Because you’re just the storefront, it can be difficult to sort out orders. Like I mentioned before, you don’t have a lot of control, and that can present difficulties when it comes to the customer support side of things.
One of the most unfortunate disadvantages of dropshipping is that you have to take the blame when your customers complain. You could be doing everything right and still run into problems if your suppliers are having issues.
