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Dropshipping - The Advantages & Disadvantages

Dropshipping - The Advantages & Disadvantages

What's drop shipping?

Drop shipping is whenever you, as a retailer take orders and a product distributor takes care of all of the shipping for you. You don't have to order stock in bulk and the stock remains with the distributor. All it's a must to do whenever you make a sale is contact your distributor and they pack up the item and send it straight to the client with your organization label on the box.

Drop shipping is a very popular option because it takes a number of the grunt work out of selling on eBay or even setting up your own on-line store. Nevertheless, for new sellers, there can be some major downsides to drop shipping.

Advantages of Drop Shipping

1. No storage required

As you are not purchasing stock to ship, you do not have to store your products in your house or have a dedicated storage area. This turns into crucial if you're selling giant items similar to kit-sets, furniture, sporting goods etc.

2. One set of shipping costs

As you are not purchasing stock from the distributor, you do not have to pay a carrier to deliver stock from the distributor to your own storage area. The only shipping prices are these to ship the product directly to your customer - this can imply that your sales value is decrease because you do not have recover shipping fees.

3. Spend more time on different areas of your enterprise

When you have a dropshipping arrangement with a distributor, you are not spending time packaging up the purchases or attending to the publish shop to send the packages. This allows you more time to spend on the other parts of your enterprise like marketing and strategic planning.

4. No packaging supplies required

Not only do you lower your expenses by not having to order packaging materials, you additionally don't have to find space to store the materials until you need them.

Disadvantages of Drop Shipping

1. Might be Costly

Most distributors will charge a seller for the cost of the labor and supplies involved in drop shipping and this is mostly between $2 and $5 per item. Many new sellers do not embody the additional costs of drop shipping of their pricing model and discover that their addition significantly reduce their profit margins, causing the drop shipping operation to be unviable.

2. You're still responsible for any shipping problems

Because the entrance for the enterprise, any issues with the shipping can be yours to handle and rectify. This includes shipping delays and damaged items. Such issues can affect your status as a reliable vendor.

3. Hard to find a distributor who will do it and do it well

Discovering a distributor who will drop ship and drop ship reliably will be difficult. Many distributors won't drop ship because of the additional paperwork concerned whilst others might not train adequate care within the packing and dealing with of shipments.

4. Low stock levels can cause delivery delays

Many drop shippers won't inform you that they are running low on stock, which means you may't tell your prospects about probably shipping delays earlier than they order. If your distributor runs out and the products have to back ordered, you might end up spending a substantial amount of time placating a bunch of sad and impatient customers.

Certainly, drop shipping is a very interesting prospect for a lot of sellers however, the process could not always a realistic one. Despite the hassle, extra costs and storage issues, 'doing it your self' can often be a more smart option and simpler to manage overall.

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