Drop Shipping is a business model that enables you, as an online store owner, to sell products to your customers, without having to spend any money upfront to purchase any products, or to pay rent for a warehouse to store your products.
Sounds pretty cool so far, right? Great!
But first, there are some PROS and CONS that you should be aware of before you begin your drop shipping business.
First, the PROS:
- Gives your store the appearance of offering a wide selection of products since you can list a variety of products
- Low Overhead since you do not have to warehouse or ship the products yourself
- No Upfront Investment in products since you do not pay your wholesaler until your customer pays you
- Test New Products for Zero Cost since you can list products without having to buy them
- More Time to Market Your Business as you do not have to spend time printing labels, packaging, and shipping
- No Order Minimums since drop shippers can ship ‘one product’ or ‘one hundred products’ at a time
- No Complying with Zoning Laws since you do not stock large items like appliances or furniture
Now the CONS:
- Small Profit Margins since the wholesaler does all the labor in packing and shipping
- No Bulk Order Discounts since your orders may be as small as ‘one item’
- No Quality Control since you are not packing the items yourself you are subject to the wholesalers packing procedures
- Delayed Delivery as some drop shippers will prioritize orders from customers who order in bulk (large quantities)
It is important that you perform your due diligence when sourcing for drop shippers.
Though you can build a strong business by only using the Drop Shipping business model, it is important for you to understand that drop shipping is only one of many business models, however, if you are just starting out with selling online and have very little money (or zero money) to invest in inventory, then drop shipping can be a very good strategy for you to use as you grow your online business.