Dropshipping – The Advantages & Disadvantages

What’s drop shipping?

Drop shipping is if you, as a retailer take orders and a product distributor takes care of all of the shipping for you. You don’t have to order stock in bulk and the stock remains with the distributor. All it’s important to do while 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 highly regarded option because it takes plenty of the grunt work out of selling on eBay and even setting up your own online store. Nevertheless, for new sellers, there will be some main downsides to drop shipping.

Advantages of Drop Shipping

1. No storage required

As you are not purchasing stock to ship, you don’t have to store your products in your house or have a dedicated storage area. This becomes essential if you’re selling large items equivalent to kit-sets, furniture, sporting goods etc.

2. One set of shipping costs

As you aren’t purchasing stock from the distributor, you do not have to pay a service to convey stock from the distributor to your own storage area. The only shipping prices are these to ship the product directly to your customer – this can mean that your sales value is lower because you don’t have recover shipping fees.

3. Spend more time on other areas of your corporation

When you’ve gotten a dropshipping arrangement with a distributor, you are not spending time packaging up the purchases or attending to the post shop to send the packages. This allows you more time to spend on the other elements of your enterprise like marketing and strategic planning.

4. No packaging materials required

Not only do you get monetary savings by not having to order packaging materials, you also don’t have to search out space to store the supplies till you need them.

Disadvantages of Drop Shipping

1. Could be Costly

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

2. You might be still responsible for any shipping problems

Because the entrance for the business, any issues with the shipping might be yours to manage and rectify. This includes shipping delays and damaged items. Such points can have an effect on your repute as a reliable vendor.

3. Hard to discover 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 extra paperwork involved whilst others could not train adequate care in the packing and dealing with of shipments.

4. Low stock ranges can cause delivery delays

Many drop shippers won’t let you know that they are running low on stock, which means you can’t inform your prospects about probably shipping delays before they order. In case your distributor runs out and the products have to back ordered, you could find yourself spending quite a lot of time placating a bunch of unhappy and impatient customers.

Definitely, drop shipping is a very appealing prospect for a lot of sellers nonetheless, the process may not always a realistic one. Despite the hassle, further costs and storage issues, ‘doing it yourself’ can often be a more smart option and simpler to manage overall.

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