Dropshipping is a logistical method for e-commerce that allows an online store to offer products to its customers, leaving inventory management and delivery of items in the hands of local suppliers or international stores. Thus, the role of the store is to serve as an intermediary, working only in the dissemination and marketing of products.
Therefore, for consumers to choose to buy products with your virtual store instead of directly with suppliers, it is essential that you offer some differentials, such as visibility, trust, promotions, concept, among others.
The dropshipping can be used for e-commerces and individual entrepreneurs’ marketplace. In this model, the merchant is only the intermediary for the purchase, receiving the difference between what the partner asks for and the amount he is charging the customer. One such service is provided by fulfillbot.
Like any type of strategy, dropshipping has both advantages and disadvantages for the merchant. Below, we will better expose each of them:
Advantages of Dropshipping
The benefits of using dropshipping lie in both forms of business, whether you are the sales site or the shipping partner. Just decide the best modality for you and use this business model to your advantage.
If you are an online store that uses drop shipping to make sales on the internet, you can have successful e-commerce with less cost. Since there will be no expenses with stocks, maintenance and shipping of the products, it is possible to do dropshipping e-commerces from an office with little monthly expenses. Instead of spending on inventory, you can focus on other areas of your business to invest in, such as a better sales platform.
You can also use the dropshipping system to have a greater variety of products. After all, since you are not using your inventory to make sales, you can try to find partners from different segments, to diversify and offer a wide range of products. You can even run tests to see what sells best and what doesn’t.
Within the dropshipping modality, making one or ten sales makes no difference, therefore, it is simpler to expand. If your partners have good logistics, increasing the number of sales is not a problem, you can grow and increase your profits without major risks. The important thing is not to waste time when requesting sales, the faster the better.
In summary, the main advantages of dropshipping are:
- lower storage and delivery costs;
- possibility of offering a greater variety of products;
- purchase of products made on-demand;
- possibility of expanding the business with fewer costs
Disadvantages of Dropshipping
But drop shipping isn’t perfect either. In this modality, you will hardly have exclusive products, which will always bring a lot of competition. It’s harder to get attention by selling the same products at the same price as many other online stores. Another disadvantage is earning very little from each sale. Even in order not to lose customers due to an excessive price, you will need a lot of sales to make an interesting profit.
Shipping is also a complex point, as it is possible for your customer to buy from more than one different partner, increasing the shipping cost. And the problem is that the customer is not always aware of this, and he may find it strange that the items from his purchase arrive on different dates.
Keeping the catalogue up to date will also require a lot of partner work. As well as managing any problem in the sale or shipment, as it is more difficult to mediate the relationship between the partner and the customer. Great care must be taken to avoid unnecessary friction and harm the image of your online store.
Some of the disadvantages of working with dropshipping can be:
- Possibility of suppliers putting the business at risk, especially international ones ;
- Total dependence on third parties to function;
- Low-profit margin, especially at the beginning of the operation;
- Lack of control of shipped goods.
However, when well planned, a dropshipping shop has everything to be successful and the profits can outweigh the expenses, as there are not many. It is a new method of digital sales that deserves to be thought about if you are planning e-commerce.