Dropshipping is a business model that allows you to sell and ship products you don’t own and don’t stock.
Your suppliers – wholesalers or manufacturers – produce the goods, warehouse them, and ship them to your customers for you.
The process is simple:
– You receive an order
– You forward the order to your supplier
– Your supplier fulfils the order
While dropshipping has many benefits, it also has many drawbacks. We’ll explore both in the sections below.
Cons of Dropshipping
1. Almost no control:
The only thing that you control is the price of the products that you sell and what kind of products you’re selling in your store.
For example, you don’t have control over:
- Shipping times. This is mainly for people that want to dropship from China. The only thing you can change is picking a better shipment method (like ePacket).
- Package design. With most dropshipping suppliers, you can’t control their package design because they take care of everything.
- You can’t put anything extra in your package for your customers. To make it personal, some webshop owners want to put a little thank you note into the package or maybe a special discount code for next time.
This also means that if your customer has a complaint about something in your supply chain (order processing, refunds, delivery speed, and so on), you can’t easily address it and fix it, because it’s not your supply chain!
Pros
1. Low Cost of inventory
The cost of inventory is one of the highest costs you’ll have if you own and warehouse stock.
You may end up with obsolete inventory – forcing you to reduce your stock – or you’ll end up with too little list – leading to stockouts and lost revenue.
Dropshipping allows you to avoid these issues and focus on growing your customer base and building your brand.
2. Low Order Fulfillment Costs
Order fulfilment usually requires you to the warehouse, organize, track, label, pick and pack, and ship your stock.
Dropshipping lets a 3rd party take care of all of that.
Your only job in this arrangement is to make sure they get your customer orders. Everything else will be handled by them.
