Dropshipping or drop ship is a type of fulfillment for retail orders in which the seller or store does not actually keep the products physically stocked. Instead, when an online store sells a product, it actually purchases the item from another third-party vendor and has the item directly shipped to the buyer. This means that the seller never actually physically handles the item, but rather only manages the order.
Advantages: how drop-shipping can help your online business
The primary advantage of dropship is that as a seller, you do not have to have storage space or manage sending parcels through the post. This means you can spend more time on optimizing your store experience, increasing your marketing efforts or improving customer interactions.
The method can be ideal for those who simply do not have the physical space or infrastructure to manage the logistics, stocking, storing and sending items through the mail. By not worrying about order fulfillment and inventory, you can easily get your store up and running and focus on other aspects of the business.
Dropshipping is very convenient and it allows you to save money, as you don’t have to rent space to store products or pay full postal rates for shipping.
Complications involved in the drop ship model
Considering how dropshipping can simplify your business, it must be perfect choice for your business, right? Wrong. There are several considerations to take into account before you sign on with a dropship service provider or wholesaler:
- Customer service woes: this is a key issue for many businesses that use the dropship model. If your dropshipping supplier fails to fulfill an order, sends the wrong item or sends a defective item, your customer will be upset with you, the seller, not the dropshipper! This can result in negative reviews or a poor reputation for your online store. For this reason, it is very important to do a lot of research before selecting dropship providers. Make sure you have several quality partners you can work with, and if your customers do have a negative experience, be sure to provide product upgrades and speedy refunds. This will result in extra costs, but it the best way to boost customer loyalty.
- It’s hard to manage your stock: you and your competitors may very well be using the same dropshipping provider, which can mean that an item that appears to be in stock may actually run out. For this reason, business owners try to use multiple suppliers, not fully depending on a single source for the products.
- Dropshipping generally applies to very popular products, so there will be lots of competition: you cannot dropship a bespoke, personalised teddy bear as there will not be enough volume in orders nor will there be manufacturers making the product en masse. Products that are eligible for drop shipping are mass produced, and this means that there will be many other sellers selling the same product. This means steep competition and smaller profits. For people to buy from your business, you will need to offer more than just the best price– complementary content, detailed product descriptions or videos or other extras will likely make the difference allowing you to eek out the competition.
- Research, research, research: we’ve already mentioned the importance of doing a thorough investigation before choosing your drop shipping providers, but you will also need to be extremely familiar with the products you are selling. As stated, you can give extra information, content, video, etc. to make your site and products more attractive, and you will need to really know what you are selling if you are going to be successful. Customers will have questions about your products, which if you will need to be able to answer– the wholesale dropshipper should be able to quickly respond to these questions, but if you can keep a running document in which you note the common questions and responses, you will save a bit of time. It’s worth purchasing your most popular items yourself, so that you can really study them and answer client questions quickly!
Dropshipping is a popular and effective model for many online businesses, but it is important to understand all that’s involved before you take the plunge. If you have doubts, feel free to contact us.
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