Dropshipping is definitely making a name for itself these days. Let’s face it. If you’ve even remotely considered an online business opportunity in the last few years, you’ve probably heard of dropshipping. In fact, for many people getting into the wonderful world of dropshipping, fulfillment work has been a real game changer. But then, if you’re like most people, you may be asking yourself, what exactly is dropshipping? Well, in the simplest of terms, dropshipping is a retail/apparel fulfillment method.
Taking a more in-depth look, dropshipping is basically when an online retailer sells products or inventory that it doesn’t have in his or her possession. In other words, the retailer places orders for various products from a third-party supplier or wholesaler. The third-party supplier then turns around and ships the merchandise directly to the customer. Generally, there are three essential players when it comes to dropshipping—manufacturers, wholesalers/third-party suppliers, and retailers. Many online stores like this business method because it allows them to be less hands-on, and it requires less of a commitment, i.e., the retailer doesn’t need an actual store, has hardly any overhead costs, and never needs to order inventory or fulfill any orders.
Of course, there are pros and cons when it comes to doing business this way. That said, when you have a better understanding of what the benefits and drawbacks are, you can decide for yourself if this is the business model for you.
As briefly touched upon, dropshipping allows you to start a business while minimizing typical startup risks. For example, as a seller or retailer here, you don’t need to put any money upfront for inventory. Generally, if things don’t go as planned with this particular kind of retail business, you may be out a few hundred dollars for a website, but that’s essentially it. Similarly, since you’re not buying inventory in bulk, you don’t have to worry about trends changing. Plus, you can also offer less popular niche products without worrying about excess inventory.
Along those same lines, the product costs are significantly reduced with dropshipping for several reasons. For starters, new products can be launched without any major investment on the retailer’s end. Moreover, everyone, including the customer, tends to fair better when it comes to shipping rates. Plus, merchandise changes hands less often, which means apparel is a lot less likely to be lost or damaged. Other notable perks of dropshipping include less work for merchants or retailers, increased availability of new products, and more affordable logistic and storage costs. With that said, one of the biggest benefits of dropshipping is the flexibility it affords people.
In terms of disadvantages or drawbacks, you can expect a few when it comes to dropshipping. Just like any other role or commerce service, dropshipping has its faults. For many, the slim margins, in the beginning, are cause for concern. However, if you know that upfront, you can make the necessary adjustments. For example, if you sell a lot of niche merchandise, you might want to balance it out with more popular items, so that you can have better margins.
Besides profitability concerns, people tend to get caught up in the process. Mishaps do occur despite the fact that dropshipping appears to be a three-step process—a customer places an order, a retailer or merchant processes the order, and a third-party supplier fulfills. Usually, the process becomes somewhat difficult when a retailer or merchant is working with several suppliers. As you’ll quickly learn, no two suppliers are the same, and every warehouse or fulfillment center has its own structures or procedures in place.
Furthermore, third-party suppliers tend to have more control over things than the retailer or merchant. This harsh reality can be potentially off-putting for people looking to start their own business and be their own boss. But then, the truth is it takes all three players (manufacturer, retailer, and supplier) to make dropshipping work seamlessly.
Choosing the right company
Speaking of third-party suppliers and fulfillment centers, you can alleviate several issues or disadvantages like the ones mentioned above by choosing the right company to work with. To find that perfect fit, as a retailer/merchant, you need to do your research. As previously alluded to, you need to find a dependable supplier with ample experience handling apparel fulfillment services. Moreover, if you can work with a supplier that prides itself on customer service, you should. By working with a supplier that cares about your customers just as much as you do, you can rest assured that any potential problems will be effectively resolved. Consequently, there’s one less thing you need to worry about as a retailer. Plus, the likelihood that you’ll have numerous customer service issues (shipping problems, out-of-stock inventory, damaged merchandise, etc.) is greatly reduced. If you’re interested in moving forward with dropshipping, but need some guidance when it comes to finding the right warehouse or fulfillment center, then click here for more information.
Now that you have a better understanding of dropshipping’s ins and outs, you should have no trouble getting started with your business. If you already have a dropship apparel and merchandise store, but have yet to make it a full-time career because of the potential drawbacks, now may be the time to consider making a change. You can become a full-time dropshipper and work with a reputable supplier or fulfillment center. That said, to be successful in this business, you need to find a way to stand out among the competition. Ultimately, one of the best ways you can differentiate yourself as a retailer or merchant is to have the right people working alongside you in your supply chain.