The Pros And Cons Of Using Dropshippers

By Author: Jane M Dawson
Total Articles: 12
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The rising cost of commercial space, problems in finding good suppliers, and declining retail sales have forced many online retailers to think about hiring dropshippers. But, the question is, Is dropshipping beneficial for your e-retailing business? There is no clear-cut answer to this question. Dropshipping has both pros and cons, and therefore, you should weigh them to come to a good conclusion.

Here are some pros and cons of using dropshippers.

Pros

Low Investment

If you want to start a retailing business with small capital, then dropshipping may be good for you. With dropshipping, you can start your business without investing in inventory, warehouses, websites, or supplies for packaging.

Low Overheads

Using a dropshipper helps to reduce your overhead as you do not need to hire manpower to take care of tasks like dealing with wholesalers, handling inventory, packaging products, and shipping products. All these functions are performed by the dropshipper.

Reduced Risks

One of the biggest risks in the retailing business is piling inventory. If your products do not sell ...
... fast, your business may face a cash crunch. There is also a risk that the products may phase out soon, which may cause huge losses. But when you use dropshippers, you do not have to worry about piling inventory as you do not own any. The products are owned by the dropshipper who ships them to your customers according to the orders forwarded by you.

Cons

Annual Fee

Most dropshippers charge an annual fee for their services. This means, in dropshipping, you pay over and above the total cost of product, which includes the cost of product, handling costs, packing costs, and shipping costs, to use the services of firm. This could mean lower profits for you.

Late Delivery of Orders

One of the biggest problems in dropshipping is that your customers may complain of late delivery. Some dropshipping firms are not very particular about shipping items on time. Their main aim is to push sales and get maximum orders. Customer service is usually not on their agenda.

Items Out of Stock

Dropshipping firms often fail to update their inventories. This causes complete chaos as customers keep placing orders even when items are not in stock. This results in late deliveries, which results in customer dissatisfaction. If your customers are not happy, they may not place repeat orders. And if you are selling on eBay, you may get negative feedback that will impact your feedback score.

Slow Sales

Usually, dropshipping firms have thousands of clients. The clients of dropshippers compete against each other for sales of the same products. This means, due to stiff and huge competition in dropshipping, your business may suffer from slow sales.

Low Quality

Some dropshippers do not have the manpower and systems to assure the quality of products. Some do not bother to maintain the quality of the packaging. Therefore, if you use a dropshipping service, you cannot be assured that your customers will receive quality stuff in good condition.

If you want to run your online retailing business with minimum overhead and hassle, dropshippers can help you out. But before taking the plunge, you should remember that there are both pros and cons to dropshipping.