When it comes to the thought of opening up an online business, several entrepreneurs are afraid of taking the step as the alarming fulfillment costs and startup hassles seem like towering tasks. These few initial challenges may be difficult to overcome, but imagine if all of your up-front investment expenses and fulfillment operations were all managed by an external source? You’d have all the convenience you would need to start off, and your business could be run from anywhere across the world. Seems like a dream, doesn’t it? Welcome to the world of drop shipping!
What Is Drop Shipping?
Drop shipping is a method of retailing which doesn’t require you to keep stocked products. Instead of this, you can team up with a source that has its own inventory – a wholesale supplier! This means you receive orders and shipment details from your customers, and you forward this to your partners. After that, all of the shipment tasks are taken care of by them. As such, all inventory and fulfillment issues on your side are minimized.
Furthermore, most of your clients can’t really figure out if you’re drop shipping, mostly because of “private label shipping” which enables you to ship from your wholesale partner with an invoice and return address customized to your online ecommerce store.
The Advantages of Drop Shipping
Drop shipping opens you up to a wide array of advantages. Some of these include:
No Heavy Investments Required
It becomes entirely convenient to set up an online business as no upfront investments or costs are required on setting up an inventory, yet you get to offer your customers all sorts of items.
Easy to Manage and Highly Efficient System
With all the major aspects of running your business already taken care of, you can focus on the aspects that increase your chances of success. These can include incorporating new and efficient customer service, sales and marketing, and operations strategies.
There are absolutely zero physical fulfillment problems that you have to deal with. Due to this advantage, you’re free to access your business anywhere across the world.
The Disadvantages of Drop Shipping
Although it seems as if there is absolutely nothing wrong with drop shipping, there are a few downsides as well.
The competition is always fierce and the margins are downright awful.
Several items will be led out of stock as syncing inventory is an issue.
You are basically selling products you can’t even see for yourself, and this can be a problem.
Third party involvement will lead to errors, logistical issues, and fulfillment problems.
Should You Really Opt for a Drop Shipping Business?
While it is understandable that drop shipping isn’t really the path that will convert you into a successful ecommerce business owner within no time, it certainly is a business model which has a lot to offer. There are a few downsides as well though, but none that seem too impossible.
Yes, you should consider opting for a drop shipping business model. But do remember, even though there aren’t any upfront inventory expenses, you will have to invest in making a quality website, marketing campaign, as well as customer service.