Pros and Cons of Dropshipping: Here’s What You Need to Know
Dropshipping!! What a fascinating word it is. Well, let’s jump right into the blog to perceive all the information about it and discuss the pros and cons of dropshipping.
Dropshipping is a way of selling goods to the consumers directly without retaining a stock of the products. The system operates in such a way that the stores that are following the dropshipping approach purchase the products from a third party and shortly dispatch the goods to the concerned customer. It becomes more convenient for the drop shipper as they do not have to manage the products themselves.
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The significant difference between the dropshipping business and regular retail business is that the drop shippers do not have to maintain an account of the stored products, unlike the standard retail business frames.
The drop shippers directly purchase the products from the third party whenever they get orders from their customers. Consequently, there are no issues of managing the stock of the products with which they are dealing.
How Does Dropshipping Work?
The dropshipping business works in the following three effortless steps.
Step-1: The first step is to advertise. The owner of online businesses has to first market their products to consumers. After which the targeted customers will get engrossed in your products and initiate a purchase.
Step-2: After the order gets placed, the owner will list out the products that have to get shipped from the third party. The owner then intimates the same to the supplier of the products.
Step-3: The third party supplier owns a stock of the products that they have advertised to the consumers. So, they package the products accordingly and ship them directly to the customer’s address with a branding tag of the business owner.
Advantages Of Dropshipping
Dropshipping is a great business idea for entrepreneurs who wish to get a start-up to their business with limited capital. It is a practice of shipping the products to the customers on behalf of the retailer.
Doesn’t that make your work simpler? We have discussed only one advantage of dropshipping. Now let’s check out what are the other benefits that dropshipping business offers.
1. Lesser Capital Required
To set up a traditional business, you need resources for some essential aspects that are investments, the market setup, storage for the products, and of course, the items that you are going to sell. But for dropshipping, you need capital only to manage your website. So it cuts down all the extra expenses hence you save a lot of money.
2. Simple To Initiate
Dropshipping acquires so many pros, yet the most significant of them is, it is easy to begin. It works in the following steps.
1. Search for a third party supplier of your goods.
2. Set up your website from which consumers can make a purchase.
3. Market the products.
It also reduces the hazard of a start-up. It is because even if your business plan does not work out the way you expected it to be then, also you do not have to worry about the expenses. After all, the only thing you invested is in setting up your website.
3. Inexpensive Products
You can always add new products to your list on the website as they do not require an investment before the sale. The other benefit is you have a reasonable shipping charge because you do not have to package and ship the products yourself.
It also leads to another advantage that is it reduces the chances and expenses of damage. It directly gets exported from the retailer and does not have to pass through different mediums, which lower the risk of loss.
4. No Trouble In Location
The hassle of finding a perfect place to set up your business or to manage your stocks is not there. The only requirement is a good internet connection and a laptop or any device from which you can operate your website. It gives you the flexibility of choosing your place of work.
5. A Broader Range Of Products
The drop shippers do not have to get themselves confined within a limited variety of products. They are flexible to add as many products they want to their list so that the consumers get a wide range from which they can choose. It would not create any issues for the retailer as well.
6. No Overhead Liabilities
If you would have set up a traditional small business, then that will include some extra expenses such as rent for the store, electricity bill, rent for storage room, bills of internet usage. On the other hand, in dropshipping, you cut off all these and only spend on the website.
7. Trouble-free Work
Dropshipping business does not require people to do a lot of work. The packaging and delivery of the products to the customers get managed by the third-party supplier. Therefore it becomes hassle-free. It also permits you to keep introducing new products on your website.
8. Reduce Storage Expenses
We have already discussed the only thing to consider for charges while dropshipping is setting up the website. As we do not need a location for storage, hence you can add numerous lists to the products that you want to sell. You can also consider perishable items for selling.
PowerAdSpy is a tool that will ease everything out for you if you aspire to start your business career as a drop shipper. It assists you in searching for the advertisements for the other websites that sell similar products as yours. You can even bookmark the ads that you feel are considerable.
It simplifies the process by showing you relevant ads of the keyword that you searched. It assists you on social media platforms such as Facebook, Google, YouTube, and Instagram on which you can market your products. It also helps in creating influencing ads for your website by comparing others.
Disadvantages Of Dropshipping
The advantages that we have mentioned earlier make the idea of dropshipping very attractive, but similarly, like other methods, this also has a downside. Let us look at some of the limitations of dropshipping.
1. Low Profits
You must be wondering that if there is a little investment for this business, then why would there be lesser profits as you are having a list of products to offer.
Well, the reason is as there is less investment, more entrepreneurs tend to set up a website. Then only for the sake of increased customer engagement and sales, they sell the products at the lowest price possible.
The drawback with these websites is they have an unsatisfactory customer service. But the new customers making a purchase from the websites for the first time will make a comparison between both the websites.
2. Issues In Maintaining Records
We discussed that it is hassle-free if you are directly shipping the goods from the supplier. But it can be a headache. It is because you are getting the orders fulfilled by many suppliers. Similarly, those suppliers commit to other retailers as well. As they are the one who keeps a record of the stock of their products, you will be unaware of the goods going out of stock.
Hence you won’t be able to fulfill the orders of your customers, which will bring down your reputation in the run.
3. Shipping Difficulty
If you have included products from different categories on your website, then you have to get your orders dispatched from independent suppliers. The issue that arises here is that if you have a lot of third party retailers, then the shipping charges for all of these parties vary. To manage this can be a little daunting.
4. Supplier Delusions
If there is an issue at the supplier’s end then also you are held responsible for all of it. It is because the branding tag is on your website. The reviews that the products get are going to show up on your website. So you have to be very careful while looking out for a supplier. So that they sell quality products even, the packaging and delivery are up to the mark.
Is Dropshipping Right For You?
After checking out all the pros and cons of dropshipping, you must be thinking is dropshipping right for you. Yes, it is excellent if you wish to start your business as a drop shipper. Many entrepreneurs have an issue of investment which can be addressed by dropshipping.
It is not a troublesome process because everything gets managed by the suppliers. The only thing you need to consider is setting up the website appropriately and marketing your products on different social media platforms.
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So Is Dropshipping Worth It In Recent Times?
Again the answer is Yes. It is because drop shippers only have to manage the website and keep adding new products to their list. Unlike other small businesses, they do not have to spend on advertising on the billboards. They can make use of some tools such as PowerAdSpy that will guide them in creating succeeding advertisements that they can post on different social media platforms.
As we all know, today’s generation is so much into social media that they prefer to purchase from online websites as it is more convenient. So even after considering the pros and cons of dropshipping, you can give it a try if you are willing to set up a business for yourself.
I hope the article helped you know the pros and cons of dropshipping. Is there something that we can incorporate? Please drop your thoughts in the comments below. I would love to hear it from you!