Pros And Cons Of Drop Shipping

When you see the word "drop shipping", the first question that pops into your mind would be "what is drop shipping?".

Drop shipping is a management process where the suppliers or wholesalers do all shipping work for you. At any point of time, you do not hold any inventory or stocks, in fact you do not need to buy the products and store them as they are held by the suppliers.

Drop shipping is fast gaining popularity with many sellers because of the various advantage and benefits it can bring. To list a few of them, with drop shipping, you don't have to do product packaging, transport, postal, shipping, inventory management, etc. As you can see, drop shipping saves you a lot of precious time, leaving you free to concentrate on other aspects of your business.

However, you must also understand that drop shipping may not be suitable for everyone despite the benefits it bring. Consider the following Pros And Cons Of Drop Shipping before you make your decisions.

No Storage Or Inventory Required - As mentioned earlier, with drop shipping, you do not need to maintain any inventory. This can be particularly useful for new sellers as it can save you a lot of money on storage rental and products buying. You no longer have to rent a warehouse to store you big bulky items anymore or even take the hassle to find ways to transport or ship them.

Furthermore, with drop shipping, there's no start-up cost! Unlike normal wholesale suppliers where you have to buy the goods first before selling, you don't have to buy anything in drop shipping. In drop shipping, you take the orders and receive payments from your clients first and use that to pay the drop shippers. Thus a positive cash flow is always maintained and you do not make any losses!

No More Packaging - Drop shipping can be very beneficial in the long run when your business start to expand. As you know, shipping a product can be a very troublesome and boring process - you have to find the correct boxes and pack the goods nicely, transport the goods yourself and pay for the postage service. While you maybe able to cope with a few items initially, you certainly would not be able to do so when your orders start to increase. At that point, it might be a better to find a drop shipper and let them do all these grunt work for you.

Cost - Before you decide to drop ship, consider your overall profits first. Can you sell at competitive prices with the drop shipper's product and make profits at the same time? Don't forget that most drop shippers will usually charge an extra $2-5 per item. Hence, determine whether your able to make a profit with this additional cost before you attempt drop shipping.

Lack Of Good Drop Shippers - Due to the extra work and labor involved, you might find that very few suppliers are willing to drop ship, and do it well! Thus, check to see if the drop shippers is up to standard before working with them.

Damage Goods - Very often, when the customer receive damaged goods, the blame will be put on you entirely although your not involved in the shipping process at all. If this occurs frequently, your reputation and credibility will take a huge dent and subsequently, your sales will be adversely affected. Thus, this reinforce the need to get a good drop shippers who can do the job well!

Delay Of Stocks - Since you have no control over the inventory, you do not know the current stock level. Furthermore, the suppliers need not tell you when they will be out of stocks. Hence you might find yourself in a situation where the customer is pressing you for the goods which they paid for, and so happens to run out on the supplier's side! This might cause some confusion and resentment, and you credibility will take more beatings!

Drop shipping is indeed a very inviting offer, the benefits of not having to buy, store, and transport the goods might be too tempting to resists. However, always do your research beforehand before taking up drop shipping as it might not be a good option in some cases.

Do You Know That The Best Drop Shipping Suppliers Can Be Found Easily On Wholesale Directories?

Save Precious Time & Effort By Getting A Good Wholesale Directory Today!