Time and time again, we’ve seen drop shipping touted as the go-to solution for entrepreneurs looking to start an online business. However, if you want to make your mark in the eCommerce industry you should hire a highly experienced eCommerce agency like First Page Australia.
While drop shipping is undeniably attractive — it requires little investment, there’s no need to manage logistics or warehouse space, and you can launch your store quickly — it’s certainly not without its challenges. Read on to see if the dropshipping model is good enough for your business or there’s a need for a change:
What Is Dropshipping?
With dropshipping, a third-party supplier stores and ships products to your customers on your behalf, so you never see or handle the inventory. When a customer places an order on your site, the supplier fulfills it by packing and shipping the product to the customer.
You’ll be responsible for taking care of inventory management, marketing, and customer service yourself. To get started with dropshipping, you’ll need to set up an online store (we recommend Shopify), find a third-party supplier and connect their inventory to your online store, then market and sell your products. You don’t have to invest thousands of dollars in inventory upfront, which is great news if you don’t have that kind of cash lying around.
When someone buys from your store, you simply purchase the item from a third party (usually at wholesale cost) and have it shipped directly to your customer. This means you don’t have to worry about managing or paying for your own warehouse space, handling returns and exchanges, or keeping track of inventory counts.
Reasons to Reconsider the Dropshipping Model in Your Online Store
Here are some of the reasons to look through this model of eCommerce:
- Lower risk
Because you don’t have to purchase inventory upfront, there’s less money at risk than in traditional retail models. You can try out new products with little or no investment.
- Easier startup
With drop shipping, you don’t have to worry about creating or maintaining a warehouse, buying packaging materials, or hiring employees. This can save a lot of time and effort when starting a business.
- Flexibility
With drop shipping, you’re not limited to selling items that are currently in stock; you can offer any product your supplier carries regardless of availability. You don’t need to worry about delivery times or keeping track of stock levels. You also don’t need to worry about packing or shipping orders.
- No Physical Products Needed
One of the reasons why dropshipping is so popular is that e-commerce merchants do not have to stock or handle any products. Rather, the merchant purchases inventory from a third party–usually a wholesaler or manufacturer–and has it shipped directly to the customer.
As long as you have excellent internet marketing skills and can generate traffic, then you are good to go. The only cost involved in this model is the amount you spend on advertising and marketing your website.
- Dropshipping on Amazon, eBay, and Etsy
Amazon recently announced plans to ban dropshipping on its platform by cracking down on third-party resellers who use the dropshipping business model. In October 2018 it updated its policies to require that sellers provide invoices from manufacturers or distributors when listing products for sale on its site. This change is intended to stop sellers from using companies like Alibaba to source cheap goods in bulk, then resell them on Amazon using the Fulfilled by Amazon (FBA) program.