Dropshipping is a fulfillment business where you buy product from a dropshipping supplier and the supplier will ship the product directly to your customer.
What are the differences between dropshipping and wholesale?
Wholesale = You buy the products in advance, list the products in your store, process the purchase and shipment of the product to your customer
Dropship = You list the products in your store, and send the order details to the supplier. The supplier will process the shipment and ship it to your customer
What are the benefits of dropshipping?
- Low Capital: No need to buy any products in advance. Only purchase it from the supplier after your customer paid for it
- Wide Selection of Products: Since you do not need to purchase the products in advance, you do not have to worry about offering too many products
- Highly Scalable: Because you do not need to process the shipment yourself, you can easily scale up the business
- Lower Risk: You wont get stuck with a bunch of products that can’t sell, even if the business doesn’t work out
- Sell Anywhere: Since you are not processing the order yourself, you can practically sell the products from anywhere, as long as you have a laptop/smartphone and internet connection. You can also sell your products to anywhere as long as the supplier can ship to the specified location
What are the disadvantages of dropshipping?
- Overcrowded Market: Due to the low entry-barier, there are many dropship sellers like you. So you need to find a niche products with low competition
- Lower Margin: Due to higher competition, this will affect your margin as you will need to lower your price to compete if your product niche is too overcrowded
- Not Easy to Find Good Supplier: There are many dropshipping supplier out there and it is not always easy to find a good and reliable one
- No Control Over Product Availability & Quality: Risk in offering products that are out of stock or low quality resulting in customer’s complaints
- Requires Basic Online Store Skills: Skills to manage an online store, product listing, payment processing, marketing, etc. So using a tools to simplified these are critical especially if you have no prior knowledge
- Supplier Management: The more suppliers you use, the more work is needed to manage
Should you consider dropshipping?
Nothing is perfect in this world and there are always benefits and disadvantages to everything. If you can manage the disadvantages, you should definitely give dropshipping a try.
Here’s a free guide to help you understand more about how to start your own dropshipping business: