Drop shipping: Pro and Cons
Drop shipping is at the moment one of the major trends in the e-commerce field: this retail system has already been used for many years in countries such as USA, UK and China; but is still new in many others such as Italy, Greece. etc. For this reason, it can be a risk, but also a big opportunity.
But what does drop shipping mean?
This is a sales model in which merchants don’t keep products in stock but sell the products before actually buying them. After that, merchants transfer customer orders and shipment details to suppliers, called a dropshipper, who ship the goods directly to the customers.
The process works in this way:
- The customer buys a product on an online store
- The shop passes the order to a supplier
- The supplier sends the order to the customer on behalf of the store
- The shop writes an invoice and a shipping notification and sends them to the customer
For this reason, drop shipping seems perfect, but obviously, as all kinds of business, it has pros and cons.
Cons to Drop shipping
- Sale and sponsor other company’s products: with this system you sell other brands and companies’ products that are not your own and this means that you are only a reseller. Therefore, if you find a competitor that is more competitive from an economic or visibility standpoint, you risk losing position.
- Homogenisation of goods: If you decide to sell consumer products, you will sell goods that are very common, so that there is high competition. For this reason, your margin on each individual piece can be quite small. The idea is to prefer niche items that only you and a few others can offer.
- Risk of exhaustion of products: since the goods are not produced by you, it may happen that they can be exhausted by the supplier. So it is a good practice to choose a dropshipper that has an integrated warehouse system that can alert you when some items are not more available.
Pro to Drop shipping
Although selling with dropshipping has all the disadvantages listed above, it also has many points in its favor.
- Low start-up costs: the only initial investment to open a dropshipping business is the cost of the e-commerce shop because you don’t have to buy goods in advance or need a warehouse to keep them in.
- Freedom and independence: dropshipping gives you the opportunity to manage your dropshipping business as you see fit. You can work from home, from a beach, during the day or night, you only need a good internet connection and a notebook.
- Endless sales possibilities: depending on the agreements made with different suppliers, you can sell many products of different brands. You can sell worldwide if you wish. In addition, you can advertise your store in any way you want: word of mouth, social media, PR, online advertising, Blogging, etc.
- Endless purchase possibilities: you can find many suppliers with more competitive prices, moreover using a powerful application such as Yakkyofy, also allows you to upload dropshipped products with photos and descriptions in just one click.
After reading this article, are you interested in opening a dropshipping business? If you do read this article to get some tips.
Read also: How to built a dropshipping store, step by step.
Do you already know how to do it? Well, in this case try Yakkyofy, the software that helps you manage all the daily task of a dropshipping business.Try Yakkyofy now! It's free