Dropshipping – The Advantages & Disadvantages

What’s drop shipping?

Drop shipping is while you, as a retailer take orders and a product distributor takes care of all the shipping for you. You don’t have to order stock in bulk and the stock remains with the distributor. All you need to do if you make a sale is contact your distributor and they pack up the item and ship it straight to the shopper with your company label on the box.

Drop shipping is a very popular option because it takes plenty of the grunt work out of selling on eBay and even setting up your own online store. However, for new sellers, there might be some main downsides to drop shipping.

Advantages of Drop Shipping

1. No storage required

As you aren’t buying stock to ship, you do not have to store your products in your house or have a dedicated storage area. This turns into crucial in case you are selling giant items akin to kit-sets, furniture, sporting goods etc.

2. One set of shipping costs

As you are not buying stock from the distributor, you do not have to pay a carrier to bring stock from the distributor to your own storage area. The only shipping prices are those to ship the product directly to your customer – this can mean that your sales worth is lower because you do not have recover shipping fees.

3. Spend more time on different areas of your small business

When you’ve gotten a dropshipping arrangement with a distributor, you aren’t spending time packaging up the purchases or getting to the submit shop to ship the packages. This allows you more time to spend on the other components of your small business like marketing and strategic planning.

4. No packaging materials required

Not only do you save money by not having to order packaging materials, you additionally do not have to seek out house to store the materials till you want them.

Disadvantages of Drop Shipping

1. Could be Expensive

Most distributors will charge a seller for the price of the labor and materials involved in drop shipping and this is mostly between $2 and $5 per item. Many new sellers do not embody the additional costs of drop shipping of their pricing model and discover that their addition significantly reduce their profit margins, inflicting the drop shipping operation to be unviable.

2. You are nonetheless chargeable for any shipping problems

Because the front for the business, any points with the shipping shall be yours to handle and rectify. This consists of shipping delays and damaged items. Such points can affect your reputation as a reliable vendor.

3. Hard to find a distributor who will do it and do it well

Finding a distributor who will drop ship and drop ship reliably could be difficult. Many distributors is not going to drop ship because of the additional paperwork concerned whilst others might not exercise ample care within the packing and dealing with of shipments.

4. Low stock ranges can cause delivery delays

Many drop shippers won’t inform you that they’re running low on stock, which means you can’t inform your clients about probably shipping delays before they order. In case your distributor runs out and the products must back ordered, you could end up spending an excessive amount of time placating a bunch of sad and impatient customers.

Certainly, drop shipping is a really appealing prospect for a lot of sellers nonetheless, the process might not always a realistic one. Despite the effort, extra costs and storage points, ‘doing it yourself’ can usually be a more smart option and easier to manage overall.

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