Pros and Cons Of Dropshipping
Dropshipping is one of the easiest ways to earn money online. Selling online is not only easy but also the future of the retail business. With the growth of Amazon, eBay, AliBaba, and many other online retail marketplaces, buying and selling online became very popular.
What Is Dropshipping
The dropshipping business is very simple. The retailer or the dropshipper does not own stock or an inventory, he rather purchases the item from a third party and has it shipped directly to the customer who had ordered it online.
The dropshipping business is different from traditional retail and e-commerce businesses. In dropshipping, the customer buys a product from an online marketplace, then, the owner of the online platform or marketplace forwards the order to a supplier and pays for it at the wholesale price. Once the supplier receives the order, he ships the product directly to the customer.
In other words, dropshippers are middlemen between suppliers and customers. They earn a profit margin between the retail price and the wholesale price.
Pros Of Dropshipping
Just like any other business, dropshipping has its own pros and cons. If you are considering entering this business, here some of its benefits:
- Dropshipping has a low startup cost. Since in this business you don’t have to have an inventory, staff, and other requirements, the cost of starting it is limited. In fact, you can start your online store for only $20.
- Risks are very low in this business, it is basically a risk-free business. To start this business you won’t invest much money, thus, if anything goes wrong, you won’t lose much. You won’t be under pressure to generate sales and make people buy from your online store.
- You can manage and run your business from anywhere as long as you have a phone and internet connection. You can access your online shop, manage orders, and deal with customers from your device.
- Since you don’t have stock or an inventory, you will have a wide range of items to choose to sell. You can sell what you want and what you can afford.
- You are free to try out new items whenever you want and stop selling items whenever you want.
Cons Of Dropshipping
The bad side of dropshipping is not that bad actually. It is true that there are some disadvantages to this business, but they are very not serious. Nonetheless most of them are out of your control and there is not much to do about them. We have listed the major disadvantages that you may encounter below:
- Dropshipping surcharges: Some suppliers will not sell you their products at wholesale prices unless you are buying in bulk. You won’t also get the discounts that wholesale buyers get. Thus, you are expected to bear some extra fees called dropshopping surcharges. However, even with the surcharges, you will be able to get products at a very competitive price that will allow you a good profit margin.
- Little control over customer service: Dropshippers have a little control over the customer experience. For example, if the shipment to your clients is delayed because of the supplier, your business will take the heat.
- Product Qualities: This is another disadvantage that you should consider before entering this business. Since the dropshipping business model revolves around a third party shipping directly the product to the customer, you won't have a chance to assess the product and see whether or not it meets the international standards.
Dropshipping is not a bad idea to make extra money or to have a full-time job. You can enter this business with little money and make a considerable profit. However, it is good only for people who have a low budget to invest. Entrepreneurs should definitely avoid it.