Ever wonder what the advantages and disadvantages are of starting a drop-ship business? This simple outline will help you determine whether dropshipping is the right business for you.
Advantages of Starting a Drop Shipping Business
1.No Inventory Required: You only have to buy a drop shipped product when the product sells. This alleviates you from paying any up-front costs. In other words, dropshipping is great if you are tight on cash.
2.Minimal Risk: If you are selling drop shipped items on eBay or Amazon, you only pay the small fee to list your product. And your customers pay for shipping. Therefore, the risk to start drop-shipping is truly minimal.
3. Product Variety: Dropshipping allows you to sell a variety of different types of products. You are not stuck to one product type because of limited cash flow. This keeps your customers intrigued and coming back to buy more products. Ultimately, having the option to sell a variety of products can help you generate more revenue.
4. Excellent Home-Based Business Opportunity: Dropshipping is an excellent home-based business. All you need is a computer, an internet connection, a basic business license, and a conviction to succeed. You can easily get started today.
Disadvantages of Starting a Drop Shipping Business
1. Supplier Challenges: You are at the mercy of your supplier. Since you do not own any product, you have to rely on your dropship supplier to package and send accordingly. If the supplier does a poor job, then this can affect you negatively.
2. Fulfillment Problems: If the supplier is out of stock, so are you. There is nothing worse than getting an order from a customer and then not being able to fulfill. This can be detrimental to your business. Unfortunately, this is fairly common with dropship suppliers. They do not always tell you when a product is unavailable.
3. Customer Service Issues: Drop Shipping suppliers are notorious for bad customer service. If you are in a situation where a customer is not satisfied, then you could be stuck between satisfying the customer and getting a resolution from your supplier.
4. Online Competition: Dropship suppliers sell products to a variety of different businesses online. Unless you are careful, you could be selling products that are already all over the web (at sometimes better prices).
Although the disadvantages listed in this outline might make you think twice before starting a drop-ship business, you should also note that drop shipping can be an excellent revenue opportunity if done correctly. The key to success when starting a drop-ship business is to find the RIGHT supplier. Once you find someone reliable to work with, then the disadvantages will be minimal. Therefore, we highly recommend checking out the Drop Shipping Supplier Guide to help you find the right supplier for your dropship business.
Source| The Balance