Dropshipping is an option in an e-commerce business that allows direct storage, and shipment to the customers. It allows you to outsource the fulfillment process. A third party is involved that handles the production, storage, and delivery of products. This order fulfillment method appeals to entrepreneurs who seek low capital investments. This business model decreases the cost of the entire process.
Although drop shipping is attractive it has limited options for those who want to sell different products. So if you are to sell generic products, this is a good option. Dropshipping also comes with many factors and alternatives offering similar benefits. Some of the agreements allow you to handle marketing and customer service, while the drop shipping service providers manage the goods. The amazon fba training program can help you start a dropshipping business as well.
Working of Drop Shipping
The dropshipping process starts when the dropshipping supplier produces or prepares the product and then an agreement is made with the shipping supplier. This supplier stores the inventory and then you host the e-commerce website. The next step in the process is the placement of an order by the customer, followed by the payment process. This order is then forwarded to drop shipping service providers. It is then their responsibility to prepare the order and ship the product to the respective customer. Usually, the only responsibility you have is to send the order to the dropshipper and keep the customer informed about the initiation process of their shipment.
Pros of Drop Shipping
Starting Cost: For entrepreneurs who want to invest the minimum in their business, a dropshipping service is a good option for them as it requires no additional cost for processing orders.
Overhead Cost: Overhead cost is reduced as you do not have to maintain a store or have to send the products on your own.
Multi-channel selling: Drop shipping can be used for businesses while selling your products on Amazon or other social media platforms.
Operating location: Dropshipping allows you to work from anywhere. Even if you are located far away, dropshipping helps you in the fulfillment of your orders.
Cons of Drop Shipping
Quality of Product: Since dropshipping reduces your involvement in the process, it hinders your ability to keep a check and balance in the quality of the product.
Competition: Given the minimal expense, outsourcing is an exceptionally competitive field.
Branding: The items you sell may not be extraordinary or recognizable from comparative contributions by different merchants, so you could experience difficulty separating your contribution.
Benefit margins: Little differences in products implies your business might be subjected to profit margins and you have to compete more on the price of the same products. Selling at low costs can gobble up your net revenue.
Fulfillment timeline: When an outsourcing administration handles the process, you don’t have command over request choice, packaging, and shipment.
Stock management: Up-to-the-minute updates on what is accessible in stock are not possible. On the off chance that a client puts in a request just to find the item is unavailable, this unfortunate experience can beat future orders and harm your image down.
Scope of offers: Because you don’t deal with requests regarding fulfillment, you might be restricted in the extraordinary offers you can run like packaging or free transportation.
Dropshipping has itself become a good source of revenue generation for many. However, amazon dropshipping offers a wide variety of benefits with some issues that can be dealt with.