If you are planning to create your own online store with a minimum investment and maximum profit from it, drop shipping is a perfect solution to start with. It is a kind of eCommerce business, in which you do not keep products in stock. You form a strong partnership with a wholesale supplier, who stocks its own inventory. It means, you provide him with customer order information and then ships products directly to the buyer. Thus, you do not keep goods in stock or make any prepayment for them.
Nevertheless, there are a lot of risks that can prevent you from reaching your goal. For that reason, in this article we will go over the list of main positive and negative aspects from the inside of this type of e-business, to make you aware of all pitfalls connected with drop shipping.
Benefits of Drop Shipping
1. More goods - more clients - more profitPlenty of e-shop merchants use drop shipping to offer a wider product selection to their customers. For example, a bookseller can offer over 100 000 different items for its shoppers using a drop ship business model. This gives bookstore owner a great advantage over merchants who stock everything as they cannot offer such a large amount of products. As a result, you attract bigger number of clients and get higher profit.
2. No prepayment, No selling risk
There is very little risk, as you do not need to have a lot of cash to get started. You offer buyers a vast range of items, without having to front up a lot of money as usually you pay the supplier after the purchase is made. It will save you from being stuck with products that have never been sold.
3. Saving loads of time!
The distributor ships a product to a customer on your behalf. You do not need to spend much of time preparing delivery of orders. So you can concentrate on the store improvement, marketing and perfect customer service.
4. Convenience & Mobility
There is no need to worry about store fulfillment as drop shipping leaves you a chance to operate and fill your store with new products from anywhere, just the Internet connection is needed.
5. Practical solution
Drop shipping not only saves time and money, but also decreases the stress and responsibility of running a business. They key benefit here is that it enables you to sell the types of goods that you want to sell, and the ability to offer a new product line for shoppers at any time.
Why not to Drop ship?
Drop shipping strategy is not without drawbacks. It is a business, so some risks are involved here.
1. Sudden stock shortages can ruin your reputation
Probably, it is one of the most common issues. For example, customer made an order, but when you place a request to the drop shipping wholesaler, you receive an answer that the product it is sold out already. Then what? -Then you are in a bit sticky situation with a client. You have to make a refund, and it is a rare occasion when the buyer will order something from your store again.
2. No full control over product properties
It is not a big problem, but when customer ask you for some unique product photo or description, it is naturally that you are unable to provide him with that.
3. Difficult to compete selling popular products
Sometimes when you drop ship, it is difficult to compete on marketplaces like eBay as you pay more per each item that other merchants are buying in bulk. Especially, it concerns such popular product categories like mobile devices, laptops... Thus, it is better to start drop shipping with some unique product categories.
4. It is not an easy task to find a reliable drop shipper
There are various ways to find a good drop shipper. You can contact the original manufacturer, on various paid directories or simply ask google for a help. But you need to keep in mind that drop ship market is full of scams and non reliable product suppliers. So do not relax, before you are 100% sure in their decency.
5. Poor customer service
Even the best drop shipping suppliers make occasional mistakes. Also, some are notorious for poor customer service. Sometimes you could be stuck between frustrated customer and your supplier. Be ready do to everything what's necessary to resolve the issue in the quickest time.
Based on the pros and cons of handling a drop shipping, now it is you turn to decide if this business model is gonna work for you.
But what you need to do first while starting with a drip ship store is to figure out which products you would like to sell and who will supply them. Then take products and upload them to your shopping cart. If you need to update your product catalogue regularly, there is a perfect solution like File2Cart, that will automate this process for you. And voila! Your store is updated with new goods easy as 1 2 3! And you are ready to start taking orders!