If you are familiar with the eCommerce business, you may know the expression ‘dropshipping products’. This is a shipping method that’s helped many entrepreneurs start their businesses without having to spend too much money upfront. So what is it? How to start a dropshipping business? Is dropshipping worth it? This method allows retailers to start dropshipping products without keeping any products on hand. They accomplish this by shipping a product from a dropshipping store directly to the customer. By doing it this way, not only do they have no inventory to manage, but they don’t have to buy any stock upfront, either. This drastically reduces the initial cost of opening a business. As with all things, there are pros and cons to the dropshipping business, so let’s explore those.
Benefits of the Dropshipping Business
Here you can find some of the pros of managing a dropshipping business. For example:
Fewer Upfront Costs
This is something described in the paragraph above. When starting a traditional business, a lot of money goes into sourcing products as well as building and maintaining an inventory. Not only do you have to purchase the inventory in advance, but you need staff to manage that inventory, which includes shipping products out when they’re purchased. It adds up significantly in cost and hours.
No Physical Presence Required
If you open an online retail store and use a dropshipping business to get your products out, you don’t need a physical location at all. Many entrepreneurs run successful businesses from a home office. This means no additional rental fees or leases and no physical upkeep whatsoever.
Passive Income
One of the biggest advantages of selling products online is that the entire process is automated. Customers find what they need, put it in a virtual cart, and check out all by themselves. Your store is available around the clock and you don’t need to be there for it to be open. Combine this with dropshipping and you have a business that runs pretty well all by itself.
Drawbacks of the Dropshipping Business
Although a dropshipping business is a uniquely effective one, nothing is perfect. Here are a few things to consider when evaluating how to start dropshipping.
Fierce Competition
When using the dropship method, you’re not selling your own products, but rather the manufacturer’s products. This means that other retailers will be selling the same exact products, shipped from the same place. Gaining the edge against the competition will require some creative thinking on your part.
No Bulk Discounts
Traditional retailers buy products in bulk, which is how they save money. The more items they buy at once, the lower the per-item cost is. If you’re dropshipping products, you’re only purchasing them from a dropshipping store when the customer does, meaning one at a time. This means that you’ll be paying full price for everything you buy.
Is a Dropshipping Business Worth it?
In conclusion, is dropshipping worth it? There’s no right answer because every business has different needs. However, dropshipping business has created several opportunities that didn’t exist before. Entrepreneurs no longer need to take out loans and risk everything to start a business. Plus, it’s always possible to shift away from the dropshipping method once you have the money to do so. On the other hand, dropshipping can be a very useful strategy only if leveraged in the right way. For example, well established companies already have a solid reputation and don’t have to worry about positioning their brand since the beginning. That’s why the dropshipping business is more suitable for more experienced e-commerce businesses.
