What is {Dropshipping} 6 Benefits and 4 Drawbacks [Complete Guide]

If you wish to know regarding Dropshipping (What is Dropshipping) in one place, then you will LOVE this (updated) final guide.

What is Dropshipping ?

Dropshipping may be a retail fulfilment manner wherever a trafficker does not keep the product in there stock for commercialism. During this technique once a trafficker sells a product, thereon time he purchases the item from a 3rd party and has it shipped on to the client. During this entire method a drop shipper or business person sees or handles the merchandise or product.
Dropshipping | Benefits and Drawbacks

What is Difference Between Dropshipping and Normal Retail Model?

The main and basic difference between dropshipping sales business model and standard retail sales business model is that the vendor does not have stock or own inventory for selling product. in this model once someone purchases a product from vender then vender purchase or purchase an inventory as needed from a 3rd party like a wholesaler or manufacturer – to fulfil that orders.

The Dropshipping Model Contains a Range of Advantages and Drawbacks:

Benefits and Advantages of Dropshipping:

  1. Less Capital is needed or required.
  2. Simple and Easy to get started.
  3. Low Overhead or Expenses.
  4. Flexible or Versatile Location.
  5. Large Selection of merchandise or product.
  6. Simple to Scale.

Less Capital Is Needed:

The main advantage or benifits of dropshipping is that it’s making possible to launch an ecommerce store or web site while not having to invest thousands of Rupees in product or inventory up front.

Simple to get Started:

Running an ecommerce store or business is become a lot of easier when you do not have to deal with physical merchandise and inventory. With dropshipping, we do not need to worry regarding below mentioned things:

  • Managing or paying for a warehouse
  • Packing and shipping your orders
  • Tracking inventory for accounting reasons
  • Handling returns and arriving shipments
  • Continually ordering merchandise and managing stock level

Low Overhead or Expenses:

Because you do not need to deal with buying inventory or managing a warehouse, your overhead expenses area unit quite low. In fact, several flourishing dropshipping businesses are run from a home base with a laptop computer for fewer than $100 per month. As you grow, these expenses will likely increase however will still be low compared to those of ancient brick-and-mortar businesses.

Flexible or Versatile Location:

A dropshipping business can be run from just about any place with an internet connection. As long as you can communicate with suppliers and customers simply, you can run and manage your business.

Large Selection of Merchandise or Product:

Because you do not have to pre-purchase the things or items you sell, you can offer an array of merchandise to your potential customers. If suppliers stock an item, you can list if available for sale on your website at no additional price.

Simple to Scale and Measure:

With a traditional business, if you receive thrice as much business you will usually need to do thrice as much work. By investing dropshipping sales product and suppliers, most of the work to method additional orders will be borne by the suppliers or seller, permitting you to expand or grow with fewer growing pains and less incremental work. Sales growth will always bring extra work especially related to client service but businesses that utilize dropshipping scale particularly well relative to traditional ecommerce businesses.

 

Conclusion of Benefits:

All these advantages and benefits build dropshipping model a very attractive, effective and engaging model for both beginning merchants and established merchants. Sadly, dropshipping is not all roses and rainbows. All this convenience and adaptability comes at a price.

Disadvantages and Drawbacks of Dropshipping:

  1. Low Margins or Less Profit.
  2. Inventory or Stock Issues.
  3. Shipping Complexities.
  4. Supplier Errors.

Low Margins or Less Profit:

Low margins or less profit are the biggest and main disadvantage to operating in a highly competitive dropshipping niche or market. Because it is so much easy to get start. And the overhead costs are very minimal or less. Many merchants or seller will set up shop and sell items at rock-bottom prices than anyone else in an attempt to grow revenue. They’ve invested very little amount in getting the business started that’s why they can afford to operate on less margins.

Inventory or Stock Issues:

If you have stock all your own items, it is relatively simple and necessary to keep track of which items are in stock and out of stock. But when you’re sourcing or approaching from multiple warehouses, which are also fulfilling orders for other merchants or sellers, inventory changes on a daily basis. While there are ways you can better sync your store’s inventory with your suppliers’, these solutions do not always work seamlessly, and suppliers do not always support the technology required.

Shipping Complexities:

If you work with multiple suppliers, as maximum drop shippers doing, then products on your website will be sourced or attached through a number of different and various drop shippers. This complicates your shipping costs and margin.

Let’s say a customer places an order for 3 items, all of which are available only from separate suppliers or seller. You will incur 3 separate shipping charges for sending each inventory or product to the customer or buyer, but it’s probably not sensible to pass this charge along with the customer, as they will think you are grossly overcharging for shipping. And even if you did want to pass these charges along, automating these calculations can be difficult.

Supplier Errors:

Have you ever been blamed for something that was not your fault or mistake, but you had to accept responsibility for the fault or mistake anyway?

Even the best dropshipping suppliers make mistakes fulfilling orders. Mistakes for which you have to take responsibility and apologize to your customer. And a low-quality suppliers will cause limitless frustration, problems with missing or forgotten products, poor shipments and low-quality packing and Etc. which can damage your business reputation and this, can harm your business.

Is Dropshipping Worth It to Work?

As in starting we warned, dropshipping is not a perfect, stress-free, and smooth way to build a successful online business. This Dropshipping business model has some definite advantages and benefits but it comes with a number of built-in complexities, difficulty and problems you will need to be able to address and solve as soon as possible without any time taken.

We will be examining these problems and how to solve or best address them will be in future blogs. The good news is that with some careful strategic planning, implementation and consideration, most of these problems can be resolved in a limited time and need not prevent you from building a thriving, massive profitable dropshipping business.