What Are The Pros & Cons of Dropshipping?
Benefits of Dropshipping
It’s easy to set up a dropshipping store.
It is very easy to launch your first dropshipping store online as long as you’ve found potential products for dropshipping. With tools like Shopify, you can complete the basic store set up in a few hours. Then you just need to optimize your store continuously based on future business conditions. Since you don’t need to keep inventory, you can test various products without breaking the bank.
No need to keep inventory or shipping products yourself.
One of the biggest benefits of dropshipping is that you don’t need to spend time packaging, shipping, and managing inventory. There will be a third-party supplier, manufacturer, or dropshipping agent who takes care of the product packaging and shipping, inventory, or even after-sales issues. Thus you can focus more on store marketing. But you’d better pay some attention to the product quality and shipping times.
Dropshipping is easy to scale.
As your business grows, if you want to scale your sales, the only thing you need to do is invest more in your marketing to attract more customers. The supply chain will not change much and the basic costs will not rise rapidly.
You can easily sell all over the world.
The advantage of online shopping is that you can buy items from countries all over the world while sitting at home with your mobile phone. As the owner of an online dropshipping store, you are the one who can sell products all over the world while sitting at home because you don’t need to do offline purchases and delivery.
It’s flexible to adjust.
You are the boss to set your own rules and you can work at home with only a laptop. It is super convenient and flexible to run a dropshipping business. You can easily make a decision to stop selling a product or list new products whenever you want. Also, the marketing strategy can be adjusted flexibly. You can even enjoy automated income while on vacation.
Disadvantages of Dropshipping
Due to so many benefits of dropshipping, more and more people are pouring into dropshipping business, and the competition is ruthless. You have to lower the prices and margins to get the possibility of getting more sales. But if you can choose the right niche and audience, and reliable suppliers, you may be able to earn a high-profit margin. In niches with little competition, you can get high profits but low sales. That’s why many successful dropshippers invest a lot in advertising to increase sales.
Therefore, to beat your competitors, on the one hand, you need better dropshipping suppliers to provide high-quality products at lower prices and faster shipping times. On the other hand, you must pay more attention to marketing and store optimization to obtain more loyal customers.
High advertising cost is required.
If you have read other articles or watched videos about dropshipping before reading this article, they will probably say that one of the great benefits of Dropshipping is that "Dropshipping does not require high upfront costs."
To be honest, dropshipping may not as wonderful as you think. Dropshipping does save inventory and management costs. But you must understand that dropshipping is an e-commerce business model that must rely on paid advertising due to the cruel competition. However, advertising is a skill that is not easy to master, and the advertising costs are not cheap. So dropshipping beginners will definitely spend more time and money in the early stage of marketing.
Dropshipping is an unstable business model.
Dropshipping is unstable because there are no permanent hot-selling products. For example, suppose you are selling a hot product, then someone finds the product you are selling through niche tools, and then they sell the same product as you to compete with you. When the market for this product becomes saturated, the volume of sales will plummet. You have to give up this product and look for another best-selling product.
Therefore, if you can’t quickly find good selling products, you will be squeezed out by your competitors, making your dropshipping business unstable.
You have little control over the supply chain.
Although there’s no need to deal with stocking, packing, or shipping, it also means that you have little or no control over the whole supply chain. The product quality, shipping time, inventory situation, etc all depend on the suppliers. When you cooperate with multiple suppliers, the quality and delivery time of the product received by the same customer may be different, which will make the shopping experience worse.
It can be difficult to handle after-sales issues.
When your customers have problems with the products, they will contact you first instead of the corresponding suppliers. You have to communicate back and forth between the customers and suppliers. What’s worse, not all the suppliers support refunds or reship, so in order to satisfy your customers, you may have to take the responsibility of dealing with after-sales issues yourself.
A dropshipping agent can provide better services than dropshipping suppliers. For example, SourcinBox is a dropshipping agent company that can source low-priced products directly from Chinese manufacturers, and conduct unified quality checking and packaging. Then we will deliver the products directly to your customers through a variety of logistics providers that cooperate with them in a fast shipping time.
We also provide an efficient and free app to help you process store orders in batches. There will be 1-on-1 customer managers to help you solve all problems, assume after-sales responsibilities, and make your dropshipping business easier and more efficient.
Updated on: 12/07/2022