Understand Dropshipping Business: Is Dropshipping Worth It?

What is Dropshipping?

Dropshipping is a business model which requires little or no capital to start a business, the person who runs dropshipping business usually being address as “dropshipper”. With dropshipping business model, you must work with a product supplier who can supply you a product at wholesale or discounted price and you don’t have to stock the product, all you need to do is just sell, Sell, SELL!!!

You pay discounted price to buy the product from your supplier, you markup the price and resell to your customer, the price difference is the profit of dropshipper.

Whenever you get a sale, you just pass the sale to the product supplier, the product supplier will handle all the shipping process on your behalf, at last your customer receives your products happily, this whole process or business model is dropshipping.

Throughout whole business process, you will realize there is only one main job as a dropshipper, which is getting sales, the rest will be taken care by your supplier.

The Advantage of Dropshipping

Since dropshipping requires little or no capital to start with, it gives those who desire to become entrepreneur a lower business entry. In old days, when the internet and shipping process is not as efficient as nowadays, dropshipper must take out some cash upfront to keep stock, otherwise you have no product to fulfill your orders and your customers would be very upset doing business with you.

As paragraph above mentioned, dropshipping business no need to keep stock (your suppliers keep stock for you), so you won’t have any stock problem. If you have pile of stock unable to sell, it eventually can cause losses to your business.

It is 24/7 business. Since dropshipping is one of the business models doing ecommerce, your online shop is always ready to take orders, as saying, make money while sleeping.

Pay no rental fee for your business. Traditional business always need a place to run the business, rental fee is inevitable expense for a business, but it requires no rental fee from online business like dropshipping. All you need is a computer, ladtop with internet access.

The Disadvantage of Dropshipping

The obvious main pain point of dropshipping always is longer shipping period. In this globalization era, most of the low-cost manufacturing suppliers locate in China, shipping from China to US takes at least 2 weeks and up to 4 weeks, keep in mind that we haven’t factored in the changing of business environment (eg. Covid-19) that could cause further delay of shipping. When the shipping takes longer period to deliver, your customers would be easily getting upset if your parcels do not meet their expectation. Imagine you as a customer wait 3 weeks and finally, happily get your parcel, and then you realize the shop owner sent wrong size, wrong specification product to you, wouldn’t you be very upset of this shopping experience? This leads us to second disadvantage of dropshipping.

Second big disadvantage is you don’t have control of product quality. Since dropshippers won’t handle the shipping process, you wouldn’t know what your supplier actually sent to your customers. So it is important for you to work with reputable suppliers. If you working with fishy and shady suppliers, you could end up increasing customer support works to handle customer complaints. In worse case, you have to compensate for the orders, end up with loss making dropshipping business.

These are the two main disadvantages for dropshipping business, other than these two could be very minor to ignore.

Conclusion

When people heard of dropshipping, they always think that it is some kind of fancy, get rich quick business, actually dropshipping is just a business model, a way to do business, nothing fancy.

Since it is a business, all rules applied on business, also apply on dropshipping business. We all know that business is not easy, if it is easy, then everyone should be millionaire already and no more poverty. So to be successful in dropshipping, we need the mindset of doing business, be persist.

Like all business, dropshipping also has its own advantage and disadvantage, understand how the dropshipping business works, utilize its advantage, and encounter the disadvantage with your solution, you could build a dropshipping business empire.

Is dropshipping worth your time and effort to invest? Definitely yes! If you are looking for a business to start with.