Dropshipping is an order fulfillment method in which a store doesn't stock the products it markets or sell. Instead, when an order for a store item patches in, the store itself buys the item from a third party and gets it shipped directly to the customer.
In this article we will read about benefits and disadvantaged of Drop-shipping, how to find companies that drop ship and some frequent doubts you may face.
Benefits of drop shipping
1. Kick Start Costs are lesser
When setting up a business or even when continuing an old one, inventory stock up usually accounts for most of the capital expenditure. And as ambiguous as it is, you can never tell how much to stock up because sells can’t always be estimated. This problem is not just solved in dropshipping but the very cause of estimating and spending, is efficiently eliminated.
2. Items can be Offered Instantly
Under the standard retail method, a retaler has to purchase an item to offer it on the web store. After all, what’s the point in offering an item for sale when you yourself don’t have it? One of the prominent features of dropshipping model is- You can feature a product you want to sell without having to check your inventory.
3. Wider Range of Products is Possible
The ability of offering a wider range of products can be an important factor alleviating the quality of your business. And, dropshipping makes it possible. Variations like colors, sizes, and quantity is not your concern and neither is the storage area, your thing to worry about. You list items and supplier takes care of it. As simple as that!
4. Testing new products becomes riskfree
One of the dreaded fears in the traditional retail model is- What if products not sell and stock remains untouched? Having to guess what your customers want to buy is tricky for any business, so being able to test the water without making any true investment is always an advantage.
5. Save Your Time Effectively
Organization and maintainence of stock constitutes for most of the time for a business owner. So, it is an added advantage if a third party handles all the work for you and you spend time growing your business through different ways.
DISADVANTAGES OF DROP SHIPPING
1. Processing Orders Becomes Cumbersome
Companies using dropshipping generally depend on more than one wholesalers and suppliers. Requirements such as order processing, billing and shipping of these agencies may vary. Due to which, complications arise.
The gap between selling a product and then getting it shipped can also take longer, as there are many conversations and actions that will take place before it gets sent off.
2. Not Having Complete Product Information Can Cause Problems
In dropshipping, you are not handling products yourself, so it is obvious that you don’t exactly know what they look like or how they are. This puts you in an awkward situation when buyers’ enquiries start popping. And, this lack of information serve as glitches in your overall working system.
On another note, you may sometimes not even have a clue about item stocks. Imagine a situation when a customer has checked out with purchase of a product and receives only disappointment because that product was out of stock with the provider and you weren’t properly updated.
3. Issues with Customer Service
Lack of information on your part is given. But what all it brings is quite an unimaginable. Many a times, condition may arise when you have no idea about how a product looks and when it will be delivered to the buyer. The only way to know is when you receive complaints or enquiries. And even after that, the process of complaint resolution slows down because of these potholes in the way of communication!
Hence it is established that along with removing the responsibility if shipping, dropshipping also removes quite an important aspect of customer experience from your control.
1. Subscribe to a Directory: There are an abundant number of drop shipping directories online. Many of them are low –quality and will provide little value. But, you will find some legitimiate ones like World Wide Brands. Their directory offers access to a searchable database of thousands of pre-screened drop shipping companies.
2. Contact the Manufacturer: If you have already decided which product you will be selling, you can directly choose manufacturer and allow him to authorize distributers of their own who may also be willing to drop ship.
3. Search on Google: Taking on the research side by yourself can be a good approach too. But you have to make sure to dig deep. It is observed that wholesale drop-shippers are naïve at marketing, and this dumps their websites on later pages in search engine results.
Though the concept of dropshipping seems pretty straightforward. And after going through above sections, you are definitely going to be able to decide whether you need to abide with it for your business and from where to start.
Once you start digging deep with the approach, some questions may arise. Following is the list of such frequently encountered questions with appropriate answers.
What’s required to work with a drop shipping company?
In US, legitimate and highly establishes dropshipping companies don’t accept working with companies that are not legalized. Hence, legalizing your business and owning an EIN or an Employer Identification Number is necessity if you are in US and want to work with such companies.
For steps on how to legalize your business in the states and get an EIN number, you can visit here.
What kind of fees do drop shipping companies charge?
There are two potential fees you’ll likely encounter with drop shippers:
What is the difference between a manufacturer, a wholesaler and a drop shipper?
Manufacturer makes a product, wholesale buys it from manufacturer and resells it to retailers and, drop shipper ships a product to your buyers .
So it’s possible for both, a manufacturer and a wholesaler to be a drop shipper. You may find manufacturers who are willing to If you find a manufacturer who is willing to ship his products directly to customers for you (rare), and in this case he will be acting as a drop shipper. Similarly, any wholesale distributor who will ship to your customers directly on your behalf is a drop shipper.
Is Drop Shipping Worth It?
So is it worth getting into drop shipping? If you’re someone who doesn’t mind rolling up their sleeves and putting in a little hard work up front this can be a great way to get an online side hustle going.
So what are your thoughts? Are you interested in starting a drop shipping business or is there something that is holding you back from taking advantage of this ripe opportunity? Feel free to share your experiences and thoughts with us.
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