You’ve probably already got a fairly good idea of the benefits that drop shipping can provide. But like anything, drop shipping also has its downsides too. Here’s a brief look at both:
- Low / No Capital: You don’t need capital to get started. Drop shipping is “pay as you go.”
- No storage: No need to store product on your premises.
- Fulfillment: All inventory management, packing and shipping is taken care of.
- Wide range: You are able to offer a wider range of products to your customers.
- Narrower Margin: Drop shipping is slightly more expensive because you are not benefiting from bulk discounts. You are also charged a small fee per shipment to cover the drop shipper’s handling costs. Combined, these additional costs can make it more difficult to compete in some categories on eBay.
- You need to do your research: You need to watch out for drop shippers who charge excessive fees
- Unfulfilled Order: Back-orders and fulfillment problems are reasonably common. Back-orders occur when the supplier suddenly runs out of stock, leaving you with sales that can’t be fulfilled. Some marketplace are quite strict on unfulfilled order.
- Poor Services Possible: Some drop shippers provide poor service that can result in negative feedback from your customer.
Oh, remember to do market research, risk analysis and don’t try to short cut everything.
Categories: Personal Finance