What is Drop Shipping Process?
Dropshipping is a type of business model that allows an individual or company to run an online store and sell products to the buyers without actually keeping the inventory themselves. When a dropshipping store receives an order from its customers, it purchases the item from a third party and has it shipped directly to the customer.
Pros of Drop Shipping
The dropshipping method has a number of advantages:
1. Low-Cost Investment
With the drop-shipping model, you only purchase a product when you receive an order from the customers, hence the low cost is needed to invest in inventory.
2. Choose from a wider range of products
When you don’t have to keep the inventory of all the items you sell, you can offer a wide range of products to your customers
3. Less Risk is involved
Without high cost invested in inventory, the risk involved with starting an online store is significantly reduced. If your business doesn’t work out, you aren’t stuck with thousands in inventory you have to sell at a loss.
4. Can Operate from any location
With the help of a drop shipping method, you need not worry about fulfillment or running a warehouse, it gives the freedom to run your online store from any location with a laptop and internet connection.
5. Highly Scalable
Because you don’t need to manually complete each order, it’s relatively easy to scale a dropshipping business.
Cons of Drop Shipping
Along with having some great advantages of the dropshipping process, there are some disadvantages also, let’s have a look at them-
1. Lower Profit Margins
The suppliers and vendors can charge you higher prices for dropshipping products depending on your location, product requirements, or niche which can result in lower profit margins.
2. Complete Liability
When Something Goes Wrong to Choose the right supplier because if the supplier messes something up in the order, you will have to face the customer dissatisfaction as the customer is purchasing the product from your online store.
3. High competition
Due to the high popularity and increase the business benefits of the dropshipping model, there are many retailers in every segment and niche. Therefore unless you have a specific segment or niche, the competition could possibly be unfavorable.
CONCLUSION
The drop shipping business model is a great way of testing your products and new ideas and if things don’t work out, all you have to do is eliminate it from your store. Need any shipping & warehouse services for your business, contact us and get a quick quote.
READ MORE:
WHY LTL SHIPPING IS RIGHT FOR YOUR FREIGHT
Best Order Fulfillment Strategies for E-Commerce Businesses