Is Dropshipping Right for My Business?

Is Dropshipping Right for My Business?

September 6th, 2012

If you don’t have a lot of money to invest in your business, don’t have inventory space and not sure what you want to sell, then yes, dropshipping could be right for your fledgling business.

With dropshipping, you don’t have to purchase any inventory, stock, pack, label or ship the products yourself. This can save time and money for the beginning online business. There are of course, pros and cons with dropshipping and using a Wholesale Supplier that offers a drop ship service.

First, let me explain what dropshipping actually is. Dropshipping is not something new or something that has been invented in the last 10 years. Many wholesale suppliers started offering this service decades ago. Remember mail order catalogs that you used to get or still continue to get in the mail? Most of those products were dropshipped. See those ads on TV? Most of those products are dropshipped. Simple explanation of dropshipping is; you don’t hold inventory and your Certified Wholesale Supplier will ship the product on your behalf to your end customer. You just collect your retail cost and shipping from the customer, order from the supplier and they will do the rest. Simple right?

The biggest pros with dropshpping, is that it keeps your initial costs down & saves time. Renting warehouse or storage space can cost you more in the long run. You will have overhead costs that can quickly run you into debt before you even really get started. You don’t have to take the time to pick, pack and ship the products. Time = money.

The biggest cons with dropshipping products are wholesale pricing and loss of control. You see, when you are purchasing one product at a time at wholesale, your wholesale costs are higher because you are not buying in VOLUME. Wholesale pricing has different structures, but it always comes down to… the more you buy, the cheaper each individual item gets. So it’s hard to compete with large retailers that are stocking brick and mortar stores that need to purchase hundreds or thousands of the same product to fill their warehouses & store shelves. The other con is loss of control. You do not have control over your shipping costs or when products are shipped out, which if you sell on eBay or Amazon, could mean bad feedback for your business.

So how do you soften the cons? Well, when you are looking for what to sell, test products that you can’t find in your local Wal-Mart or other chain stores. Wal-Mart doesn’t carry everything! There are thousands and thousands of products and brands that they just don’t sell.  Once you find those products, then check your competition online to see if you could compete in that market. Loss of shipping control.. choose wholesale supplier that will ship 24-48 hours after ordering. Choose suppliers that offer tracking numbers and stay on top of what was ordered, and what was shipped out. Communication with your wholesale supplier is key when using a dropshipping service.

If you don’t feel that dropshipping is right for you, then you always have the option to purchase inventory and ship the products yourself. We invented the term light bulk wholesale that means that you can purchase at better wholesale prices with minimum orders of $500.00 or less. Our Directory of WBI Certified Wholesalers  contains thousands of wholesale suppliers that offer these lower minimums if you want to have that control.

photo by: z287marc

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2 Comments

  1. Thank you for breaking this down to make it so easy to read and understand.

    Trackback by Jorge — September 10, 2012 @ 6:44 am

  2. I completely agree with all the points above. On our site, DropshipCritic.com, we highly recommend that new sellers start with a drop shipping service in the beginning to get acclimated to selling online. Using a drop shipper can take a lot of work off your plate and allow you to focus on other essential parts of your business such as responding to customers and marketing your new online business. In addition to this, the initial investment of a drop shipping start up is always less because you never have to invest in inventory, it’s already in your suppliers warehouse ready to ship!

    However, after a while, it is advisable to lessen your dependence on your drop shippers and start stocking more items. As mentioned above, buying in volume can save you a LOT of money which will provide for better profit margins.

    We created a page to help sellers choose between wholesale suppliers and drop shippers, you can see it here… http://www.dropshipcritic.com/whats-right-for-me.html

    Comment by John — September 10, 2012 @ 7:43 pm

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