With a dropshipping business model, you can move products directly from the manufacturer to the consumer without having to handle inventory or storage yourself. Essentially, it lets you sell products online without physically stocking them.
This poses an incredible advantage for new start-ups or individual entrepreneurs as it significantly lowers initial investment costs. You do not have to manage a warehouse, pack goods, or handle returns. All of this is taken care of by your dropshipping supplier.
However, despite its benefits, dropshipping does require strategic planning and careful selection of quality suppliers. Successful dropshipping hinges on delivering reliable service and top-notch products to customers.
So, let’s take a look at 12 pros and cons of starting a dropshipping store online. You will then be able to better decide whether it is the right choice for you.
6 Pros of Starting a Dropshipping Store
It is often best to begin with the good news. So, here are six pros of starting a dropshipping store online.
1. Low Start-up Costs
With dropshipping, there is no need to invest in inventory upfront. This significantly lowers the barrier to entry compared to traditional retail models. You simply purchase a product when you have an existing order to fill.
2. Flexible Location
One of the great benefits of running your own dropshipping business is geographic independence. As long as you have a solid internet connection, you can operate your business from anywhere in the world.
3. Wide Product Selection
Without having to pre-purchase all the items you sell, you are free to offer a wide variety of products to your customers. If suppliers stock an item, you can list it for sale on your website at no additional cost.
4. Automated Tools Save You Time
One more advantage of the dropshipping model is the availability of numerous automated dropshipping tools for your store.
They can significantly streamline your store and business operations by helping you manage inventory, track shipments, handle customer service, and even automate order processing.
These technological advancements not only save time but also minimize errors, giving you that extra edge to focus on expanding your business and finding innovative ways to increase revenue.
5. Reduced Risk
Stocking unsold inventory or products that become obsolete is a bottom-line killer for any retailer. Since being a dropshipper means not holding any physical goods yourself, this risk is eliminated.
6. Easy Scale-up
In traditional businesses, if you receive more orders, then it means more work and monetary outlay in terms of inventory and shipment handling. But with dropshipping, all these tasks are handled by your suppliers. In turn, that allows you to easily expand your business without much hassle.
6 Cons
Before you begin any type of business, you should familiarize yourself with the disadvantages. You can then make a better decision as to whether to start that type of business. And if you do, you can more easily find solutions to the drawbacks you have identified.
So, here are six cons of starting a dropshipping store online that you should be aware of.
1. Low Profit Margins
In dropshipping, you might face lower profit margins due to the operational costs involved with the suppliers. Sometimes, the competition might push you to sell for a narrow profit in order to stay attractive to customers.
2. Inventory and Supply Issues
Keeping track of inventory can be challenging with dropshipping since you are relying on third-party suppliers. If they run out of stock or discontinue a product, it could leave you and your customers in the lurch.
3. Limited Control Over Shipping
One downside is your limited control over shipping. Suppliers will handle shipping products directly to customers, so any delays or mishaps in delivery reflect poorly on your business despite being out of your control.
4. Quality Control Challenges
Since you never physically handle the merchandise, keeping quality checks can become difficult. Poor quality or incorrect items could potentially lead to unsatisfied customers and damage your store’s reputation.
5. Customer Service Challenges
With dropshipping, the burden of customer satisfaction also increases. You are the point of contact for any questions, complaints, or problems your customers have with their products, even though you do not handle the products directly.
This can sometimes lead to complex scenarios where you will need to resolve issues between your supplier and dissatisfied customers, which can be tricky and time-consuming.
6. Competition Can Be Fierce
Finally, the ease of setting up a dropshipping business means that you will face plenty of competition. Many online stores could be selling similar or identical items, which might force you to price your products lower to stay competitive.
How to Know If Starting an Online Dropshipping Store Is the Right Choice for You
To decide whether starting a dropshipping store is the right choice for you, first carefully consider the above pros and cons and research dropshipping in more detail.
The more you understand the business model, the better informed you will be to decide whether it is the right option for you.
If you have a knack for e-commerce and love researching and keeping abreast of consumer product trends, dropshipping is certainly worth considering.
