Dropshipping – The Advantages & Disadvantages

What is drop shipping?

Drop shipping is when 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 must 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 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. However, for new sellers, there might be some major downsides to drop shipping.

Advantages of Drop Shipping

1. No storage required

As you are not purchasing stock to ship, you do not have to store your products in your house or have a dedicated storage area. This becomes crucial if you’re selling massive items resembling kit-sets, furniture, sporting items etc.

2. One set of shipping costs

As you aren’t buying stock from the distributor, you don’t have to pay a carrier to deliver stock from the distributor to your own storage area. The only shipping costs are those to ship the product directly to your customer – this can mean that your sales price is decrease because you don’t have recover shipping fees.

3. Spend more time on other areas of your enterprise

When you have a dropshipping arrangement with a distributor, you are not spending time packaging up the purchases or getting to the submit shop to ship the packages. This permits you more time to spend on the opposite parts of your corporation like marketing and strategic planning.

4. No packaging supplies required

Not only do you get monetary savings by not having to order packaging supplies, you also don’t have to find space to store the materials till you need them.

Disadvantages of Drop Shipping

1. May be Pricey

Most distributors will charge a seller for the price of the labor and supplies concerned in drop shipping and this is usually between $2 and $5 per item. Many new sellers do not include the additional costs of drop shipping in their pricing model and discover that their addition greatly reduce their profit margins, inflicting the drop shipping operation to be unviable.

2. You are nonetheless answerable for any shipping problems

As the entrance for the business, any issues with the shipping will likely be yours to manage and rectify. This contains shipping delays and damaged items. Such issues can have an effect on your reputation as a reliable vendor.

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

Finding a distributor who will drop ship and drop ship reliably may be difficult. Many distributors is not going to drop ship because of the additional paperwork involved whilst others could not train enough 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 inform your customers about presumably shipping delays before they order. If your distributor runs out and the products must back ordered, you may find yourself spending quite a lot of time placating a bunch of unhappy and impatient customers.

Actually, drop shipping is a very interesting prospect for a lot of sellers nonetheless, the process might not always a realistic one. Despite the effort, additional prices and storage points, ‘doing it yourself’ can often be a more wise option and easier to handle overall.

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