Dropshipping is a hot new e-commerce business trend that can be an extremely profitable business model.
Dropshipping means that you (as the store owner) don’t carry any physical inventory. When a customer places an order on your site, a third-party ships the product(s) directly to your customer.
- Lower Start-Up Costs: Since you don’t have to carry inventory you can get started with less up-front costs
- Easier to Test Products: You can get an idea of what your customers like/don’t like without getting stuck with products that don’t sell.
- Easier to Scale: You don’t have to worry about backorders and waiting on new inventory. As long as the third party has product, you can scale with more traffic.
- You Aren’t Stuck to Your Location: Since you aren’t the one shipping the goods, you don’t have to worry about traveling or working somewhere else.
- Product Quality: Unless you make sure to get a sample of everything you plan on selling (NOTE: You should ALWAYS get a sample of a product first) you may not always get the best quality products.
- No Control Over Delivery: Since you aren’t the one shipping, the part is out of your control. Delays can happen a lot with third party shippers and there’s not much you can do.
- Added Costs: A dropshipper may have extra fees when shipping more than one item. You have to make sure you fully understand all costs involved.
- Low Margins: Since there is a middleman your margins will be lower.
- Packaging and Delivery: Maybe I’m a stickler (or ummm.. perfectionist) but I would want to know what the packaging looked like once the customer receives your product. Trust me – customers will make a judgement on your company based on how a product arrives. Depending on where it’s shipping from, sometimes, the products have have a funky smell or the packing is a very generic oversized poly bag with no identifiable info. Keep the customer experience in mind
With all that said… If you are interested in giving dropshipping a try, here’s a great video on getting started.