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Dropshipping – The Advantages & Disadvantages

What is drop shipping?

Drop shipping is if 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 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 extremely popular option because it takes quite a lot of the grunt work out of selling on eBay and even setting up your own on-line store. Nonetheless, for new sellers, there will be some main 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 very important if you are selling large items such as kit-sets, furniture, sporting goods etc.

2. One set of shipping costs

As you are not purchasing stock from the distributor, you don’t have to pay a provider to carry stock from the distributor to your own storage area. The only shipping prices are those to ship the product directly to your buyer – this can imply that your sales value is lower because you don’t have recover shipping fees.

3. Spend more time on different areas of your corporation

When you have got 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 opposite parts of your online business like marketing and strategic planning.

4. No packaging supplies required

Not only do you lower your expenses by not having to order packaging materials, you additionally don’t have to find house to store the supplies till you need them.

Disadvantages of Drop Shipping

1. Can 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 don’t include the additional prices of drop shipping in their pricing model and find that their addition significantly reduce their profit margins, causing the drop shipping operation to be unviable.

2. You’re still liable for any shipping problems

Because the entrance for the business, any issues with the shipping will likely be yours to handle and rectify. This consists of shipping delays and damaged items. Such issues can affect your repute 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 could be difficult. Many distributors will not drop ship because of the extra paperwork concerned whilst others may not train ample 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’ll be able to’t tell your customers about presumably shipping delays before they order. If your distributor runs out and the products must back ordered, you could end up spending a substantial amount of time placating a bunch of unhappy and impatient customers.

Certainly, drop shipping is a really appealing prospect for many sellers however, the process may not always a realistic one. Despite the effort, extra prices and storage issues, ‘doing it your self’ can typically be a more sensible option and simpler to handle overall.

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