Selling products online has accorded business owners the opportunity to reach a wider audience. Because of this, businesses have been able to scale their operations and record higher profits. There are different ways business owners can sell their products online. But, one method that is becoming popular today is dropshipping.
Dropshipping is a means of fulfillment. In today’s age and time where people shop more online than in brick-and-motor stores, it’s not realistic for e-commerce owners to stock goods. Instead, when a customer orders a particular product, they use a dropshipping company to pick the item from the manufacturer and deliver it to the customer. This way, they avoid the cost of storing products in a warehouse. Selling products online through dropshipping companies has a myriad of advantages including:
Selling products online through dropshipping companies cuts down your costs
One of the costs e-commerce businesses have to contend with is storage and inventory management. Most e-commerce websites do not have their storage facilities, so they rent out warehouses to store their goods. This can significantly add up their storage costs. Also, inventory management can be costly, as businesses will need to monitor stock movement and replenish. They will also have to do stock taking and guard the inventory against theft. All this can drive up the overall business cost.
Selling products online through dropshipping can maximize your profits
Because you’re ordering directly from the manufacturer, you get products or goods at really good prices to enable you to increase your profit margins.
Selling products online through dropshipping allows you to focus on marketing your business
With dropshipping, you don’t get to worry about deliveries, as the dropshipping company does that. It allows you to focus on what matters for your business.
Selling products online through dropshipping minimizes your selling risks
If you utilize the dropshipping model to deliver your goods, it greatly reduces your selling risk because you don’t have to stock up or hoard more inventories. And in this largely technological world, things change pretty quickly. An innovative product may be introduced in the marketplace today, and you find yourself stuck with your products.
Selling products online through dropshipping is advantageous because no minimum order is required
The awesome thing about dropshipping is that you don’t need a minimum order to get what you want. You can order even one product, and it’s delivered.
Dropshipping is a model that is growing at a frantic pace in the e-commerce space. Essentially, instead of having supplies deliver goods to your brick-and-motor store, they deliver it direct to the customer. It cuts out postage and storage costs. However, although dropshipping has many upsides, it’s not a good model for every e-commerce website out there. Let’s look at the downsides to dropshipping:
Selling products online through dropshipping comes with order processing challenges
Most e-commerce businesses that embrace dropshipping use multiple dropshipping companies. Every dropshipping company has its own rules regarding order processing, billing, and delivery. This can bring a lot of complications for the business, which means the time between order taking and delivery can be long. This can annoy customers, and some may decide to opt out of your business.
Selling products online through dropshipping can negatively impact customer service
While drop shipping cuts out the shipping cost on your side, customer experience will not be the same. You have no control over the quality of products delivered, as well as the time they’re delivered. And when the customer calls to complain about late delivery or quality of delivery, the response may take longer, as you have to contact the dropshipping company to find out about the details of the issue. An unhappy customer is a sign of bad business, and your e-commerce website can suffer.
Selling products online through dropshipping comes with stiff competition
With dropshipping increasingly becoming popular, more people are venturing into that line business. This means that competition is stiffer than ever before. So to get a competitive drop shipping company is not easy because most of them have already been snapped up. Also, because of the competition, you’ll not get a good profit margin, as most manufacturers charge for the fulfillment service. Ideally, in some situations, you might find that shipping the products yourself can be cost-effective than using a drop shipping company.
Selling products online through dropshippng creates a lot of information gaps
Because you are not interacting with the products shipped to the customers, you may not know the precise details of the products, such as dimensions, weight and more. Plus, the descriptions supplied to you by the manufacturer are not comprehensive, so you cannot wholly rely on them. This creates a lot of information gaps on your website.
Dropshipping will become big moving forward because businesses are seriously looking for areas in their businesses to cut costs. And if you’re a business person, you should consider this line of business. It offers the greatest possibilities of greater return on investment. From the downsides highlighted above, you can see that dropshipping is not an option for every e-commerce store owner. So research first to know all the costs, including the hidden ones, before you take the plunge.