Dropship for startup eCommerce business
Dropshipping is a retail fulfillment method where the inventory of a store is managed by a third party – usually a distributor and manufacturer. A store purchases an item from a third party and has it shipped directly to the customer. As a result, the merchant never sees or handles the product.
The biggest difference between Dropshipping and the standard retail model is that the selling merchant doesn’t stock or own inventory. Instead, the merchant purchases inventory as needed from a third party – usually a wholesaler or manufacturer – to fulfill orders.
Here are some benefits and drawbacks –
- Less Capital is used
Inventory costs are nil right from the start. Retailers have a lot of cash in hand for other business aspects
- Easy to get started
- No warehouse costs
- Tracking inventory
- No return hassles
- Stocks level issues
- Low overheads
- Easy to scale
- An Array of choices to choose from
- Operate from anywhere
Let’s talk about the disadvantages
Low Margins – Third party shipments charge a premium for delivering products. So selling margins are really low.
When sourcing multiple items from multiple warehouses, some things may not work seamlessly and suppliers may not be in sync with technology.
Suppliers Errors – Mistakes are a part of the game, low quality suppliers and endless frustration may be a cause of a fatal error. Low quality packaging, missing items, wrong shipments can damage a firm’s reputation and bring it to its knees.
Shipping complexities – Sourcing items from various firms can be a challenge. Charges may vary from supplier to supplier along with shipping costs.