Right, you’ve done your research on dropshipping – you finally know what it means – and now you want to know what the advantages and disadvantages are in the dropship industry.
Well, here they are...some of them anyway.
Advantages of Dropshipping
What this means is once you make a sale, it is only then that you purchase your stock and have them shipped to your buying customers. This also saves you the space, time and money from having to rent a warehouse. On top of this, you also don’t need to worry about packaging, handling returns and managing your stock level – to some degree.
Low Operating cost
As mentioned above, you don’t deal with purchasing inventory, renting a warehouse and you don’t even need a brick-and-mortar store. Which means starting off with a cheap laptop or desktop computer is all you need. Over time your expenses may grow, though compared to actual retailers these costs will still be much lower.
With dropshipping you can pretty much offer any items, products and stock you want to sell, assuming your supplier can supply them of course.
Disadvantages of dropshipping
There can be challenges and difficulties with dropshipping too. Here’s a few:
You’ve most likely had experiences where the stock reaches you and it’s the wrong item, or it doesn’t reach you in time, or at all.
While your suppliers or dropshippers are trying to fulfill your orders, they are also fulfilling orders for other merchants, which often results in human errors. You’ve most likely had experiences where the stock reaches you and it’s the wrong item, or it doesn’t reach you in time, or at all.
Because the supplier (dropshipper) is never seen or known by the customer, the responsibility of any errors such as a failed delivery or an incorrect shipment lands on the merchant.
In any such case, it is best to do either one of three things:
Admit fault: Apologize and let the customer know you’re going to fix the issue. Never mention the dropshipper and/or supplier to avoid confusing the customer.
Make it up to them: You can offer a partial refund (such as for the shipping fee), or a full refund. However, you may even insist in sending a replacement free of shipping costs. Anything you can think of will be greatly appreciated.
Speak to your supplier: Even though you will need to accept fault, under no circumstances should you have to pay for it (unless you are offering freebies). If the supplier is to blame, then they are responsible for fixing this error.
Because you’re not stocking your own items, there are times when keeping track of your inventory may become very difficult. Finding a solution to keep an eye on what is in and out of stock will require extra resources, time and technology.
Many dropshippers source their stock from multiple suppliers. If your customer purchases items that are sourced from multiple suppliers, then you will need to factor in the separate shipping costs for all the products. The other downside to this is if the shipping costs are quite high when added together, your customers may go elsewhere because they think you’re overcharging them for shipping.