Is Dropshipping risky or beneficial?
Dropshipping can help a seller to bypass upstream processes by delivering products straight to the customer by using a third party to ship products. By doing this a company does not have to retain the physical presence of product inventory as the product goes straight to a customer. Through this one can save enormous operating costs of the business as supply chain management (which has a lot of operating costs) because this becomes a third party's responsibility. There are many benefits and cons associated with this kind of a business model, and we will be looking at these today:
The main benefit behind this type of business model is the lower operating costs associated with doing business, and the sheer scalability. As the costs that are associated with supply chain and other upstream processes of doing a normal business are high, when these processes are outsourced to a third party, then the costs become much lower. Dropshipping products then certainly is low cost, and not having to hold inventory allows you to focus solely on GROWTH.
The need for a physical location goes away:
As there is no need to store one's company inventory somewhere because dropshipping products are sent the very time after it was ordered, so there is no need for physical location. With the physical location for a product out of the equation, much less money and time is wasted on something like warehouse management, hiring staff and paying for property. This model then becomes extremely beneficial for all the parties involved.
Provides ubiquity and flexibility:
The greatest thing about dropshipping products is that one only needs an internet connection and some business acumen (training) to begin this type of business. This makes the whole business very flexible and portable. You can operate through your lounge or even near a swimming pool. Never has been a business this portable, and is more then than being a traveling salesmen.
Now is the time for cons:
Competition can be high:
As the barriers to an entry of this kind of business are, essentially less, many young entrepreneurs start this kind of business. There can be a good chance a businessman (or woman) starting on this business model will be pricing his or her product the same as another one in the market. The only way to succeed with this model now is to have access to resources most don't. Take SupremeCommerce Training resources for example.
Processing of products can be difficult:
As there is no physical presence of the inventory, it is difficult to keep track of different products across different third-party delivery companies. A lot of time there can be a case where many of the products can get lost, be out of stock at the time of order, or prices can increase without you knowing. There are ways to circumvent these events though.
Customer service is lost:
When upstream processes and supply chain management go out, customer service also goes out as a result. Because of its absence, it is very difficult to know what happens after the delivery of a product as there is no feedback from the supplier, and you have to then become a customer service warrior.
You now know what benefits and disadvantages are associated with dropshipping but if you want to try it out, there are many dropshipping programs available. Finding the right training and resources in this industry can be tough - which is why we've made it simple enough that a newbie with no experience can make it happen. Learn more here, and start here.
WRITTEN BY: Kevin Edgar