What is drop shipping?
Drop shipping is when the product distributor takes care of all the shipping for you. Rather than ordering stock in bulk, the stock remains with the distributor. Then, when you make a sale, you send an email to the distributor and they pack up the item and send it straight to the customer with your company label on the box.
Drop shipping is a very popular option with sellers because it takes a lot of the grunt work out of selling on eBay. However, there are some major downsides to drop shipping – especially for new sellers.
Here’s a list of the pros and cons of drop shipping so that you can make the right decision for your business.
Drop shipping Pros
1. No storage room required
You don’t have to fill up your living room with stock and packing materials! This is particularly useful if you are selling large items such as kit-sets, furniture, sporting goods, and so on.
2. No shipping costs getting stock delivered from the distributor
Drop shipping means you don’t have to pay a carrier to bring stock from the distributor to your own storage area, which can mean big savings in the long term.
3. Spend more time on other areas of your business
You don’t have to organize the packing and postage system, nor do you have to drive to the post shop each day to post your packages. This gives you a significant increase in time to spend on other tasks such as marketing and communicating with customers.
4. No packaging required
You save money by not having to order and store packaging materials.
Drop shipping Cons
1. Can be Costly
You have to pay for the cost of the labor and materials involved in drop shipping. Generally this is between $2 and $5 per item. Many new sellers find that the additional costs of drop shipping greatly reduce their profit margins and sometimes nullify the whole operation. This is the main reason why drop shipping is not a viable option for some sellers.
2. You are still responsible for any shipping problems
So the item arrived damaged? Was there a shipping delay? You’ll get the flak for anything that goes wrong with the shipping even though it is technically out of your control.
3. Hard to find a distributor who will do it and do it well
Many distributors will not drop ship because of the extra paperwork involved. Then there is the matter of checking up on quality standards to make sure your items are being packed correctly.
4. Low stock levels may cause unhappy customers
Your drop shipper won’t necessarily tell you when they are running low on stock. If they run out and have to do a back order, you may end up spending a great deal of time placating a bunch of unhappy and impatient customers.
Drop shipping is a very appealing prospect for many sellers; however it is not always a realistic one. Despite the hassle, ‘doing it yourself’ can often be a more sensible option financially, especially for new businesses.
SaleHoo is one of the fastest growing product sourcing portals on the internet. It contains a database of drop ship, wholesale, closeout and manufacturing suppliers offering thousands of product suppliers to consumers! Visitors are allowed to sign up for unlimited and lifetime access to the completely searchable database of products and suppliers. The database is regularly updated, ensuring that the latest retail products are always available for purchase and SaleHoo carries the BBB Reliability Seal!
Drop shipping is a cost effective and time saving process for those large and in demand companies and supplies.
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Its very informative post about drop shipping. Thanks for sharing such valuable information.
I haven’t tried them, but from their reputation I believe that http://www.worldwidebrands.com/ is a fair dropshipping directory as well.
Really valuable tips,i getting your opinion.
I was really not that well informed about the concept of drop shipping so this piece of relevant information was really very helpful………. good one
you all illustrated well. Now i can find view after analyzing the pro and cons of the drop shipping
It is really convenient way of selling. I really like the concept of drop shipping.
Really, never knew this much about drop shipping, I allways thought its easy to work with dropshippers, thanks for telling the cons of working with them.
This is good that you presented the both side of drop shipping.
better than not having a store at all!
I wouldn’t use drop shipping. It is just one more way that things can get screwed up and one more set of issues to handle. It is a lot more to take up on yourself and your company, but it is worth it in my opinion.
Hey, there are some great ideas here! I never thought that there could be so many ways to make money online besides the usual things that you hear about like dropshipping and the like. Excellent post!
I’ve been doing drop shipping for a several years(electronics) and never had a problem. I guess you have to find a reliable source.
Its very informative post about drop shipping. Thanks for sharing such valuable information.