Dropshipping is a way of selling products online without needing to buy or store any inventory. Instead, you pass customer orders directly to your supplier, who packs and ships the goods on your behalf.
Is dropshipping right for you? Let’s examine the pros and cons.
Pro: Low set-up and operating costs
Because you don’t need to purchase product inventory, store it, or ship it yourself, the upfront and operating costs of starting a dropshipping business are relatively low. You’ll need to purchase a domain name, build a website, and pay for web hosting. You also may need to purchase a WordPress theme or a premium plugin.
Other than that, there aren’t any other major costs – you can start selling immediately. It is advisable, however, to purchase a sample of each item you intend to dropship to make sure it is of acceptable quality. Doing this may cost a little more at the start but could save you from processing many refunds later.
Pro: No limits on your product range
Because you don’t need to find somewhere to store your products, you can offer an almost unlimited selection, easily keep up with product trends, quickly add new items, and delete product lines without worrying about getting rid of old stock. Dropshipping also makes it easy to test new markets without the risk of stocking something that people just don’t want to buy. Another benefit is that you can quickly scale up without investing in larger premises, extra staff, or additional inventory.
Pro: Work from anywhere
All you need to run a dropshipping store is a computer, an internet connection, and some time and dedication. You don’t need to be in a specific location to manage your inventory or pack goods.
Con: Low margins
Depending on the products you choose to dropship, the profit margins can be tight, especially if you are in a competitive niche market. That’s why it’s important to do your homework, choose the right niche, and target the right customers.
Con: Lack of control
While it’s great having someone else take care of the storage, fulfillment, and shipping of your products, it also means that you are dependent on them to get your orders right and process them efficiently. It’s important to choose the right dropshipping partners that will meet your operational standards.
Con: Customer service challenges
If things do go wrong with an order, it can be frustrating when you’re not able to sort it out yourself. As a dropshipper, you’re a go-between in the problem resolution process, and your supplier controls the outcome. You may have to refund the customer while trying to sort things out.
In conclusion, dropshipping is a great, low-risk way to start a retail business, but it’s not a get-rich-quick scheme. Like any venture, it requires a lot of research and dedication to create a successful online store. However, if you get it right, dropshipping can offer an extremely flexible option for running a lucrative business.