If you thinking about starting a dropshipping business, you’re certainly not alone as people all around the world are getting started with this business model. Dropshipping isn’t a surprise to anyone anymore. According to Google Trends, the keyword “Dropshipping” has hit the all-time high searches which makes it clear that the popularity of dropshipping is growing among people.
Dropshipping has made it convenient for everyone to run their business as it is quite easy to set up and eliminates the need for warehousing, making it easy for the people to jump on the e-commerce bandwagon. Nowadays, one-fourth of online business use dropshipping as their business model.
Just like any coin, dropshipping also has some benefits & some drawbacks so before getting started with it, it is essential to know both the aspects as it will help you in understanding if it’s a good fit for you or not.
Although dropshipping is a popular business model but it isn’t necessarily the best decision for every online business. If dropshipping isn’t the right fit for your business then it will likely to fail so before stepping into the world of dropshipping, you need to discover all the pros and cons associated with dropshipping.
To help you determine If the dropshipping business model is ideal for your brand,
We’ve rounded up some of the pros & cons of dropshipping that will help in making the best decision:
Pros of dropshipping:
Dropshipping eliminates the inventory cost
One of the most common benefits of dropshipping is that it helps in eliminating the inventory cost. In conventional business, there is an obvious need to hold inventories to run a business whereas, in dropshipping business, the inventory cost gets eliminated because you have to source it from the wholesaler. When it comes to running a business, one of the biggest hurdles is to invest capital in storing inventories but in the dropshipping business model, you get free from the burden of inventory.
Dropshipping business is easy to set-up
Another major business advantage of dropshipping is that it is easier to set up as compared to the conventional form of business. Other business models require a hefty financial investment which not every entrepreneur can afford. If you are running low on funds then you can choose dropshipping as you don’t have to invest heavily in setting up a dropshipping store. With dropshipping, you can easily take your brand off the ground.
Low risk involved
The next major benefit of running a dropshipping store is that there is low-risk involved. When it comes to running a conventional business, there is a constant pressure on the seller to sell out all the stock otherwise it will become worthless after a while but there is no such pressure in dropshipping business. In dropshipping business, the seller has to pay the supplier only when an order is placed by the customer so it is completely risk-free.
Introduce new products with low-risk
To scale-up the business, it becomes essential to keep introducing new products otherwise people will lose interest in your online store, and you won’t be able to move your business forward. In conventional business, it takes a lot of resources to introduce a new product as you need to invest heavily in manufacturing, storing and marketing them whereas, in dropshipping business, you can easily introduce new products without spending a lot of money.
Minimizes fulfilment expense
With dropshipping, the business order doesn’t have to worry about as the whole process of packing & shipping products to the customers is carried out by the third party or the supplier that you’ve partnered with. It takes a lot of resources in shipping a product which can result in making shipping a bit expensive but in dropshipping, fulfilment expense is quite less as your supplier do it for you.
So, these are the major advantages of running a dropshipping store. Before making any decision, you should check out some of the drawbacks associated with it.
Cons of dropshipping:
One of the major drawbacks of dropshipping business is that there is a very low-profit margin for the business owner. Since most of the work is carried out by the supplier so you have to share your profit margin with him which makes it very difficult to enjoy impressive margins. In a conventional business model, you can easily attain higher profits by getting all the inventory at once at discounted rates but it is not possible in dropshipping business.
Lack of control
In dropshipping business, the supplier is responsible for fulfilling & shipping the order that’s why the business owner couldn’t exercise control over their business operations. The business owner is dependent on the supplier for handling the orders it brings uncertainty to the picture. In conventional business, the business owner is liable to carry out all the business activities so he has full control over the activities.
Product quality can’t be monitored
The next major drawback of dropshipping is that the business owner doesn’t have any control over the quality of the products. Since the products are handled by the seller so the business owner couldn’t monitor the quality of the products. If the supplier mishandled the product then the reputation of the brand is at risk as the business owner is in direct contact with the customers, not the supplier.
The next major issue with dropshipping is the business owner has no control over the inventory. He has no idea how much inventory is there with the seller so if the demand for any product couldn’t be met by the supplier then it will result in incurring losses.
So, these are the pros and cons of a dropshipping business. Before stepping into the dropshipping ecosystem, make sure to consider all its benefits & drawbacks.
Wrapping it up, we can say that, dropshipping is an amazing business model but to make most out of it, you should be aware of all its benefits & drawbacks as it will help you in making smart decisions.