Drop Shipping Basics
Is drop shipping really right for you? This simple guide will help you figure it out.
Step 1: Evaluate the Pros & Cons of Drop Shipping
How can drop shipping benefit you?
Drop shipping is not a ‘get-rich-quick’ scheme. As with any business, success requires dedication and hard work. However, there are distinct benefits to using drop shipping in your online business:
- You can become a retailer without needing to invent large amounts of money.
- You can start a business and test the market with very little risk.
- You don’t have to carry inventory or pay for inventory up front—if the product doesn’t sell, you never have to buy it from the supplier.
- You don’t have to buy packaging materials and shipping labels, nor will you need a shipping account. The supplier handles all of this for you.
- You purchase products at wholesale pricing and set your own retail prices.
- You can focus more time and resources on revenue-producing activities like marketing, advertising and product research instead of inventory management, packing and shipping.
What are the drawbacks of drop shipping?
Many retailers get a lot of value from working with drop shipping suppliers, but it is by no means a perfect solution for everyone. Drop shipping comes with some drawbacks, including the following:
- You lose some control over shipping times, packaging processes, and package branding.
- Your supplier may run out of a hot-selling product.
- Drop shipping fees (a handling fee set by the supplier for each order) may increase your expenses.
- You can’t take advantage of discounts for buying in bulk up front. This is the trade-off for the supplier bearing the cost and risk of managing the inventory.
Will drop shipping save me time and money?
In Step 2, we’ve created a basic list of the time and cost factors to consider in evaluating the potential savings of using drop shipping versus a wholesale inventory model.See the Potential Savings