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 do not have to order stock in bulk and the stock remains with the distributor. All you must do whenever you make a sale is contact your distributor and so they pack up the item and ship it straight to the client with your company label on the box.

Drop shipping is a very popular option because it takes a number of the grunt work out of selling on eBay or even setting up your own online store. Nonetheless, for new sellers, there may be some major downsides to drop shipping.

Advantages of Drop Shipping

1. No storage required

As you aren’t buying stock to ship, you don’t have to store your products in your house or have a dedicated storage area. This becomes very important if you’re selling large items corresponding to kit-sets, furniture, sporting items etc.

2. One set of shipping costs

As you aren’t buying stock from the distributor, you don’t have to pay a carrier to bring stock from the distributor to your own storage area. The only shipping prices are these to ship the product directly to your buyer – this can mean that your sales worth is lower because you don’t have recover shipping fees.

3. Spend more time on different areas of your corporation

When you might have a dropshipping arrangement with a distributor, you aren’t spending time packaging up the purchases or attending to the publish shop to send the packages. This permits you more time to spend on the opposite components of what you are promoting like marketing and strategic planning.

4. No packaging materials required

Not only do you get monetary savings by not having to order packaging supplies, you also do not have to find area to store the materials until you want them.

Disadvantages of Drop Shipping

1. Might be Expensive

Most distributors will cost a seller for the cost of the labor and supplies concerned in drop shipping and this is mostly between $2 and $5 per item. Many new sellers do not embody the additional prices of drop shipping in their pricing model and discover that their addition tremendously reduce their profit margins, causing the drop shipping operation to be unviable.

2. You’re still responsible for any shipping problems

As the entrance for the enterprise, any points with the shipping can be yours to handle and rectify. This includes shipping delays and damaged items. Such points can affect your fame as a reliable vendor.

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

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

4. Low stock levels can cause delivery delays

Many drop shippers won’t let you know that they’re running low on stock, which means you’ll be able to’t inform your customers about probably shipping delays earlier than they order. In case your distributor runs out and the products should back ordered, it’s possible you’ll find yourself spending a great deal of time placating a bunch of sad and impatient customers.

Actually, drop shipping is a really interesting prospect for many sellers nonetheless, the process could not always a realistic one. Despite the effort, further costs and storage issues, ‘doing it yourself’ can typically be a more sensible option and simpler to manage overall.

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