The main advantages and disadvantages of dropshipping
Dropshipping, probably you have heard of it. Right now, dropshipping is the number one way to make money online. There is a reason why so many people want to enter the world of e-commerce this way. However, there is still a lot of confusion surrounding the whole dropshipping concept. For example, what are the benefits of dropshipping? And are there any disadvantages to dropshipping? To find out today, we recommend you to read this article as soon as possible!
What is dropshipping anyway?
Before we get into the main dropshipping advantages and disadvantages, it's helpful to take a quick look at what dropshipping is. Dropshipping is an e-commerce model in which a company does not keep the products it sells as stock. Instead, the seller purchases the necessary inventory from a third party - usually a wholesaler or manufacturer - to fulfil orders. The main difference between dropshipping and the standard retail model is that the seller does not hold stock or own inventory. Instead, he acts as a middleman. Want to learn much more about what drop shipping is? You can read it in the blog "What is dropshipping and how does it work?" to learn much more about this!
The most significant advantages of drop shipping
One of the questions we see come up incredibly often is the benefits of dropshipping. You will only experience several benefits when you choose a dropshipping model. We've made it a little easier by listing these benefits of dropshipping for you below:
1. You don't have the hassle of big purchases
Let's face it, when you start an online store, you often don't have a massive warehouse at your disposal to store all the products. The e-commerce world consists of young people taking their first step toward entrepreneurship. Dropshipping makes it possible never to have to deal with large-scale storage again. Thanks to dropshipping, you can buy precisely what you need. So you will never again be stuck with stock you can't get rid of. Apart from the fact that this saves a lot of hassle, it is also much cheaper.
2. You run less risk as a seller
Apart from having less hassle with purchases, dropshipping also means significantly less risk for you as a seller. For example, if something goes wrong during the logistical process, you as a drop shipper are not ultimately responsible for this. Returns do not arrive at your private address, so you do not have to worry about it. If you notice that certain products from a specific supplier do not meet your expectations, you can find someone else. For many entrepreneurs, this high degree of independence is the decisive factor in choosing dropshipping.
3. You can quickly start
Another significant advantage of dropshipping is that it is accessible to everyone. As long as you have a laptop, enough free time and a fresh perspective, it is possible to succeed in this sector. Because an external party handles the entire logistics process, you must maintain your website and find customers as a seller. How much capital you need to start dropshipping depends entirely on what you want. With a few hundred euros, you can often already have a good website made. Apart from the costs of the KVK registration and perhaps the use of a Virtual Assistant to speak to customers, there are no major cost items you need to consider. Ideal for all young entrepreneurs tired of working in the supermarket or catering industry!
The disadvantages of drop shipping
With all these advantages, you're wondering if dropshipping has any disadvantages. While there aren't many, it's essential to be aware of some drawbacks and pitfalls.
1. Delivery Responsibility
One thing that is often overlooked is that as a dropshipping entrepreneur, you have the responsibility to deliver your products to customers, even though outside parties do the logistics process. In extraordinary situations - e.g. the COVID crisis - it is therefore up to you to keep the customers happy if the delivery takes a while. You can do this, for example, by offering a discount on subsequent orders.
Another potential disadvantage of dropshipping is that there is currently a lot of competition on the internet. Due to this high level of competition, margins for drop shippers are slightly lower than before. Logically, the more people want to start dropshipping, the lower the amount you can and will keep net. You should just not let this get you down. By persevering and by investing enough time and effort, it is also possible for you to achieve success within this e-commerce niche!
3. Supplier reliability
Because you didn't have the product in your possession, you can run the risk that the customer will receive a defective or low-quality product. This is at the expense of your brand and future sales. It is therefore essential that you find out in advance which supplier you are going to use. For this, you can study the reviews of other B2B's that use this supplier or agency in advance. You can also order a test order delivered to your home, so you know exactly how the product works and whether everything meets your standards.
4. Possible additional costs
There is nothing as annoying for a customer as waiting a long time for a product or, worse, an order that does not arrive. This is not only your responsibility as a seller but will also cost you something you would rather stay away from. For example, you have paid for the product's purchase, and the shipping costs have been paid, but now the customer wants her money back. Therefore, you must work with a reliable delivery service that is not only fast but also keeps you (and, of course, the customer) well informed about the status of the shipping process. Fortunately, it's not a drama these days like it used to be, where six weeks of waiting time were the norm. Faster delivery times and better shipping prices are two requirements you don't have to make concessions on as a drop shipper.
Start dropshipping today
We hope the info in this article has helped you learn a bit more about the advantages and disadvantages of dropshipping. As you've seen, dropshipping is the way to make money within e-commerce. Although you're not the only one offering products this way, there is still a lot of profit. The many benefits of drop shipping make it one of the most accessible options for a reason. If you want to learn more about the world of dropshipping, then you're in luck. Here on the site, there are many more valuable articles to read!
To get the best out of your future dropship adventure, it is advisable to start with a bestselling product. This way, you will get the hang of setting up your own business and earning with the number of hours you want to work each day. The number of hours can easily be reduced if you know exactly what that one bestseller should be. For this, you can spend your time searching through the Facebook ads library, but you can also choose to outsource this product research to e-pickr®. We have researched the best products for you, and you'll find them easily in our Nichepickr. With more than 200 million products, a niche always appeals to you.