The topic of dropshipping is something that I see so much of at the moment. People actually think it’s as easy as finding a dropshipper, starting a website and just waiting for the money to come in. Unfortunately, it’s really not like that. Now don’t get me wrong here, there are many good reasons to start a dropshipping business, but there are equally many bad reasons that I had to share with you. If you can get a dropshipping business right then it’s, in my opinion, one of the best possible businesses to run as you really don’t have to do that much or have a large warehouse with a crazy amount of overheads.
WHAT IS DROPSHIPPING?
Dropshipping is basically a supplier who enables you to sell their products. You would need to find the right supplier and you would need to set up a business account with them. Once you have your account set up, the dropshipper will provide you with the photos and the product descriptions for the items you wish to sell on your website.
It’s your job then to promote and market the product that you are trying to sell. The customer who is interested in the product will then purchase the item through your website and pay you directly. Once you have been paid, you then pay the dropshipper their asking price, keep the profits yourself and the dropshipper will ship the item directly to your customer.
Sounds perfect and easy, right? Well, it is, but only if like in any business you are competitive, have a good product and know how to find customers who are willing to buy your products. Let’s take a look at the pros and cons of drop shipping.
THE PROS OF DROPSHIPPING?
1) Dropshipping is honestly one of the most cost-effective and easiest kind of businesses to start as it requires little or no cash to actually get started. Unlike the traditional method of having to buy stock in bulk, store it, photograph it, ship it out and all the other tasks that dropshipping removes of.
2) With dropshipping, you can also try different product lines that you are unsure of before potentially buying something that won’t sell in bulk. It also removes one of the most time-consuming aspects too, which is shipping. With dropshipping, it’s all included in the price you pay the supplier.
3) One of the greatest benefits of dropshipping is the fact that you can trial and test products without having to buy stock in. There’s nothing worse in business than buying a product range that hardly sells and you still have to store it which ultimately costs you money. In theory dropshipping is like a real-life market research without any risk.
4) Adding on from the last point, a great plus is the fact that you don’t need any space to store items. All you really need is a computer and an internet connection. When you dropship items the supplier sends directly to the buyer, you don’t even see the product which is a huge bonus, but, it can also cause a few problems that I will get into later on.
5) You can offer new products straight away. As soon as you have uploaded your items to your site they are ready to be sold. No waiting around for the products to get delivered and photographed. Usually, when a retailer wants to start selling a product, they’ll have to wait until all of their stock has been shipped in order to begin advertising them on their website. After all, what’s the point in offering an item for sale when you can’t actually sell it? Using dropshipping means that when you decide you want a product on your site, you can start advertising almost immediately.
6) With dropshipping you save so much time. That time you can then use more wisely to promote and market your products. The whole working from a beach is actually possible with dropshipping. Of course, there is still a lot of work involved but you get the point.
7) One of the biggest reasons that businesses go under and fail is due to overhead costs. With dropshipping you can work from anywhere in the world without having to so store any inventory. You don’t even need staff to help you pick and pack orders. The only bits you need to do is market your site and keep up with customer service.
THE CONS OF DROPSHIPPING?
1) The biggest one is the lack of control that you have over the post-sale process. Because the supplier sends the product straight to the customer, you don’t get a chance to inspect the items quality or ensure that the product is even the right one. You also don’t have any control over the shipping process. If you’re selling your product with a 3-day delivery window and the dropshipper doesn’t hit that delivery window, then who gets the blame? Unfortunately, it’s you.
2) It’s not as profitable as you might think. When buying from a supplier at wholesale price you get the product at a much more discounted price. Of course when you are selling a product that everyone else is selling then you are up against competitors being cheaper than you. After all, they bear all the risk and it takes them time to process orders and ship them out. Usually, dropshippers add on up to around £5 to each product for a dropship service.
3) One huge set back is if your dropshipper can’t keep up with their orders. I know that sounds like a good thing from your side as it could mean you’re selling loads. But what you need to remember is that your dropshipper probably has over a hundred other customers like you. If one of those customers has a major increase in sales that the dropshipper has to keep up with then it could then impact your lead times.
4) It’s easy to get into dropshipping. You can get a site live that sells all the latest gadgets and have a super nice looking storefront with a massive range of different products. It’s so easy, in fact, that at least a thousand other people are probably doing the exact same thing. See where I’m going with this? Without a large brand behind you, anyone can replicate what you are trying to do, and they probably already have. That makes it so much harder to break through the competition to get to customers which then means more money soaked into marketing.
5) When you are selling a product that everyone else is selling at a similar price it’s so hard to stand out. You can try and be the cheapest, but that is a losing game. There is always someone else willing to go cheaper, and margins on dropship items can be tiny, to begin with. You honestly don’t have a lot of flexibility and then on top of all that, some suppliers have minimum advertised retail prices, which means, that you can’t really go lower than a certain price set by them.
6) It’s all good talking about how you get everything you need from your dropshipper like the product images that are usually too small, bad quality and look exactly like all of your competition. Then there are the descriptions you get that are all identical too. It makes making your business stand out really hard when you have the exact same pictures and content to everyone. Especially if you are also the same price as the competition.
7) You can get into some really tough customer service issues. What if a customer wants more information about a product that you don’t actually have? Sure, you could get in touch with your dropshipper to find out the relevant information, but how long will that reply take? Even though dropshipping removes the responsibility of shipping but it also removes a large part of the customer experience from your control. There’s no way to ensure that a product has arrived on time or as described. When a customer calls to either complain or enquire, the process of resolution is slowed as you often don’t have the necessary information at hand and the query or complaint will have to go through a third party supplier before it can be solved.
Now don’t get me wrong here, I’m not trying to put you off a dropshipping business. Like I have previously said, I think it’s a great business model and if you can get it right then it does involve less work and stress than a traditional business. I just wanted to let you know that you have to treat it as a real business and that it’s not an overnight success story as it can be sometimes advertised as.
If anything you have to work harder on your marketing techniques due to the fact of the fierce competition. But the number one great thing about dropshipping I would say is the fact that you can give it a go without having to spend money on buying stock. All you need to do is create your own online shop, have good branding and the right dropshipper and you can give it a go. Good luck!