Drop-Shipping is a streamlined and efficient form of the retail business, wherein the seller accepts customer orders but doesn’t keep the goods sold in stock physically, instead, in a form of supply chain management, it transfers the order and shipment details to the manufacturer or a wholesaler which then ships the goods directly to the customer. Drop-Shipping is a form of retail business where the store doesn’t keep the products it sells in stock. It ships them directly to the customer through a Third-Party System. As a result, the seller doesn’t have to handle or store the product.
Benefits of Drop-Shipping
1. Less Capital Required
Most of the traditional and online retail businesses require a hefty investment to develop and earn profits. Additional costs are required for things like inventory, staff, marketing etc. But drop-shipping requires a very less investment because you don’t have manufacture products or store them. Everything is Third-Partied.
2. Low Cost of Inventory/Inventory Management
In traditional retail businesses, the cost of inventory and its management is one of the highest. Drop-Shipping allows you to avoid these additional investments and focus on other aspects of the business.
3. No worry of Order Fulfilment
Drop-Shipping allows you to skip the gruesome part of tracking packaging shipping etc. and lets you sleep peacefully. The order fulfilment is handled by the manufacturer or the supplier from which you are buying the products.
4. Flexibility and Passive Income
A drop-shipping business can be run from anywhere with an internet connection and a laptop or a mobile. It is one of the easiest business ventures to run. And most important of all, it provides a passive income to pay the bills and enjoy life.
Disadvantages of Drop-Shipping
1. High Competition
The low barrier to entry and easy administration makes drop-shipping a very competitive field. You will find people who are selling the same things as you and you would have to stand out in every aspect in order to compete.
2. Low Margins
Since its easy to get started, and the investments are also less, therefore many competing stores will sell at the lowest prices in an attempt to gain revenue and build a customer following. And since you’re just the middleman and not producing or manufacturing anything, you will just earn less. In order to increase your margin, you would have to do a lot of business.
3. Shipping Problems
Since you will be mostly dealing with multiple suppliers (as most dropshippers do), it will be very difficult to handle all of them and the errors made by the supplier will be on you and you would have to take responsibility for it.
Yes, Drop-Shipping can be very profitable and if executed correctly, it can become your main source of income. It’s easy to start the business, but very tough to stand out in this competitive market. If you can kick the competition, then there’s no stopping you. Who knows that you might be one of the most known dropshippers in the coming years.
amazon , flipkart are the examples of dropshipping bussiness
Best of Luck!