10 Pros and Cons of Starting a Dropshipping Business
Entering the arena of dropshipping is appealing for several reasons, but there are also drawbacks you need to be aware of before you make a commitment to this marketplace. We’ve put together the ups and downs of dropshipping business so that you can decide whether or not starting this type of business is the right move for you.
Pro: Inventory Management Is Outsourced
In a traditional retail setup, you’d need to buy, store, sell, and ship products, taking on all associated costs and risks. With dropshipping, the idea is that you essentially act as the middleman, connecting suppliers with customers and embracing a hands-off approach to dealing with inventory.
Con: Razor-thin Margins
You shouldn’t expect to make a big profit off the products you sell because your prices need to be competitive to attract customers, and suppliers won’t be giving you major discounts because they’ll be doing most of the hard work in terms of things like manufacturing, branding, and distribution.
Pro: Straightforward Setup
Most of the challenge of getting a dropshipping business up and running is finding the right suppliers and getting agreements in place. You won’t need to worry about many of the overheads that come with a standard ecommerce or brick-and-mortar retail venture; you just need a good website and a clear product lineup to connect with consumers.
Dropshipping Con: Lack of Control
Because you’re offloading most responsibilities to a third party, you won’t have a means of controlling things like the quality of the products or the branding applied to them.
Pro: Your Business Can Be Highly Automated to Grow Fast
With the help of ecommerce dropshipping automation solutions like Spark Shipping, many aspects of your business can be partly or entirely automated. That means once everything’s up and running, it’s a case of sitting back and watching the orders flood in, with fulfilment handled without you needing to lift a finger.
Con: Customer Satisfaction Is Challenging to Achieve
Another result of your lack of control as a dropshipping operator is that when customers experience issues, you’ll have fewer options for appeasing them. Delays in shipping, problems with products, and return requests could become tricky to deal with, as there will inevitably be many moving parts in your supply chain. However, if business owners know the main warehouse shipping mistakes affecting their customer satisfaction ratings, they can get ahead of the problem before it worsens.
Pro: You Can Run Your Business Flexible
With a dropshipping business, you don’t have to be based in a particular territory to target customers there. So in that sense, it’s a truly flexible, global opportunity, which also applies to hiring other team members to help grow your company. In addition, you’ve got unlimited choice over the products you offer. So long as there’s a supplier with the right items for your audience, you can get started. It’s even possible to find good products to dropship through trial and error. You won’t have to make significant inventory commitments to see if a particular item is a hit.
Con: Shipping Is a Potential Pain Point
Last-mile delivery comes with challenges in any ecommerce context, and for dropshipping businesses, this is the point at which there’s the most chance of something going awry. It’s also an area where costs can hurt your bottom line, so making this efficient and affordable is essential.
Dropshipping Pro: Agility
The twists and turns of retail trends are hard to predict, but with a dropshipping site, you’ll be agile enough to go with the flow of consumer spending instead of always being slightly behind the curve.
The ecommerce market is huge and hotly contested, with established rivals creating issues for up-and-coming brands. To carve a niche and grow sales, you’ll have to be patient, work ceaselessly, and know when to make changes if your current strategies are not bearing fruit.
Starting a Dropshipping Business – Final Thoughts
With the right attitude, a level head, and a willingness to experiment, starting a dropshipping business can lead to sustainable success. It just pays to be aware of the potential problems, as well as the opportunities, before you start.
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