If you browse Instagram or Pinterest you might think that every business needs to start selling online. After all, pictures of virtual shelves filled with products are what these social media sites are filled with. Immediate demand doesn’t always translate into the long-term, however. It can be difficult to know whether e-commerce is right for your business and which channels to focus on. In this article, we explain the pros and cons of dropshipping as a way to sell online, its benefits and risks, as well as how it could work for you. Let’s dive in!
What is Dropshipping?
There are many ways to sell online. For example, you could process orders from your own warehouse, hire a fulfillment company to ship your orders, or have your customer take care of the shipping (e.g. returns, exchanges). One increasingly popular e-commerce model is dropshipping. In this model, you don’t hold inventory and your customer pays you for the product, but never takes possession of the item. Instead, the supplier ships the item directly to the customer. Dropshipping is still a fairly popular e-commerce model because it doesn’t require you to stock a large inventory or pay for the upfront cost of goods used to fulfill orders. This means that a business can start with relatively little capital.
Why Start With Dropshipping?
One of the most attractive things about dropshipping is that it doesn’t require you to invest in a lot of inventory. Many e-commerce businesses, especially those that sell clothing, home goods, and many other products need to purchase inventory upfront. If you sell out of season or simply make a misjudgment about how much of a certain type of product you’ll need, you might end up with inventory that is collecting dust. In dropshipping, you don’t need a large inventory. If a customer places an order, you simply order the item from the supplier, ship it to the customer, and then bill the supplier for the cost. You don’t need to worry about having inventory sit around when you don’t need it.
Pros of Dropshipping
The biggest pro of dropshipping is that you don’t have to stock inventory. This may sound silly, but it’s a huge advantage. As we mentioned above, many businesses have to invest in a large amount of inventory upfront. Even if you sell your goods online, you may need to keep a certain amount on hand to ship items to customers who want them quickly. Whatever inventory you do have, you’ll need to store and insure, either in your house or in a warehouse. And if you’re running a business that relies on seasonal goods like Halloween costumes and Christmas trees, you may have some inventory that isn’t selling at any given time. A second pro of dropshipping is that it’s easy to sign up. There are many e-commerce platforms that allow you to sign up as a dropshipper. They’ll help you get your business online quickly by helping you set up your store, process payments, and communicate with suppliers.
Cons of Dropshipping
The biggest con of dropshipping is that you don’t own your customers. This may not sound like a big deal at first, but it could come back to haunt you. If you’re selling a high-quality product, you want the customer to be happy with it and come back for more. If you’re dropshipping, you have no control over what the customer receives. They could receive the product promptly, but it could also be of poor quality. This could result in unhappy customers and could be bad for your brand. If a customer receives a shoddy product, they’ll probably stop ordering from you. However, they may also be less likely to buy from you again if they have to go through the same poor experience again.
How to Start with Dropshipping?
The first step to starting with dropshipping is to find a supplier. There are lots of suppliers out there, and some of these suppliers cater to e-commerce entrepreneurs. You’ll want to find a supplier that specializes in dropshipping. This way, you’ll have someone to take care of returns, customer service, and shipping. That way, you can focus on marketing your store and fulfilling orders. Once you find a supplier that works for you, you’ll want to set up a contract to protect both you and the supplier. This contract will let you know what your responsibilities are and what the supplier’s responsibilities are. If you’re working with a dropshipper, you may also want to negotiate with them on the price of items. You can also start to build your social media presence at this point.
Conclusion
Dropshipping is one way to sell online without having to worry about stocking inventory. However, you should know that selling without holding inventory comes with some risks. You’ll have less control over your customers’ experience and could see decreased sales if your suppliers ship low-quality products. If you’re looking to start an e-commerce business, dropshipping may be the way to go. You’ll be able to get your store up and running quickly and easily. Just make sure you’re aware of the risks, and you’re prepared to take action to minimize them.
