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Dropshipping – The Advantages & Disadvantages

What’s drop shipping?

Drop shipping is whenever 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 need to do while you make a sale is contact your distributor they usually pack up the item and send it straight to the client with your company label on the box.

Drop shipping is a very talked-about option because it takes loads of the grunt work out of selling on eBay and even setting up your own online store. Nonetheless, for new sellers, there can be some major downsides to drop shipping.

Advantages of Drop Shipping

1. No storage required

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

2. One set of shipping prices

As you are not purchasing stock from the distributor, you don’t have to pay a provider to bring stock from the distributor to your own storage area. The only shipping costs are those to ship the product directly to your buyer – this can mean that your sales worth is decrease because you do not have recover shipping fees.

3. Spend more time on different areas of your corporation

When you’ve gotten a dropshipping arrangement with a distributor, you are not spending time packaging up the purchases or getting to the put up shop to send the packages. This permits you more time to spend on the opposite parts of your enterprise like marketing and strategic planning.

4. No packaging supplies required

Not only do you save money by not having to order packaging supplies, you also haven’t got to search out house to store the materials until you need them.

Disadvantages of Drop Shipping

1. Will be Costly

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

2. You’re nonetheless answerable for any shipping problems

As the entrance for the business, any issues with the shipping can be yours to handle and rectify. This includes shipping delays and damaged items. Such issues can have an effect on your popularity as a reliable vendor.

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

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

4. Low stock levels can cause delivery delays

Many drop shippers won’t inform you that they’re running low on stock, which means you can’t tell your prospects about possibly shipping delays earlier than they order. If your distributor runs out and the products should back ordered, it’s possible you’ll find yourself spending a substantial amount of time placating a bunch of unhappy and impatient customers.

Definitely, drop shipping is a very interesting prospect for a lot of sellers nonetheless, the process could not always a realistic one. Despite the hassle, extra prices and storage points, ‘doing it your self’ can usually be a more smart option and easier to manage overall.

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