Dropshipping is a retail fulfillment method where the store doesn't keep the products it sells in stock. Instead, when a customer orders a product, the store purchases it from a third party and has it shipped directly to the customer. This means that the merchant never sees or handles the product.
One of the biggest advantages of dropshipping is that merchants don't have to invest money upfront on purchasing inventory, which can be risky for new or small businesses. Additionally, dropshipping allows merchants to offer an extensive range of products without having to worry about storage space.
Because there are no physical products involved in dropshipping, setting up an online store can be done relatively quickly and easily. However, this also means that margins tend to be lower than if merchants were purchasing wholesale and selling their own inventory.
The Pros of Dropshipping
One significant advantage of dropshipping is that merchants can test different products without committing financially upfront. They also don't need to worry about storing inventory or shipping logistics - all these tasks are handled by third-party suppliers.
Another benefit is that because dropshippers buy in bulk, they often receive better pricing from suppliers than individual retailers would get buying smaller quantities.
Finally, since essentially anyone with an internet connection and basic computer skills can start a dropship business, there's little risk involved beyond time invested in learning how everything works.
The Cons of Dropshipping
While dropshipping offers several benefits compared to traditional retail models, there are some downsides as well.
Perhaps most significantly: Because you're not seeing or handling any product before sending it out (or even necessarily knowing who your supplier actually is), quality control becomes very difficult. This could mean more complaints from unhappy customers or even legal issues if ordered items turn out defective or dangerous.
Margins on individual products are also lower than buying wholesale, which can make it challenging to run a profitable business. Finally, while dropshipping is relatively easy to get started with, the competition is intense and staying competitive requires significant time and effort invested in marketing and SEO tactics.