The eCommerce industry has taken a turn with all mod cons for today’s businessmen. And Dropshipping being one of the finest choices, as it enables sellers to function as the middleman by not dealing with the products. Dropshipping is the process of moving goods from the manufacturer right to the seller without going through the usual distribution channels.
Despite the fact that dropshipping abolishes the need of a seller to operate the fulfilment process, receive and ship products the hard way. It can make a cut into their profit margin and harm their business.
There are many pros and cons of Dropshipping that can impact the decision to use or not to use drop shipping. Alternatively, you can place an order with a supplier or company and have them ship the product to the customer.
However, dropshipping, being a revolution in the eCommerce industry, nevertheless has a lot to discover and accommodate. Through this article, we will draw your attention to some pros and cons of dropshipping which can directly or indirectly impact your business.
Pros of Dropshipping on Amazon
1. Easy to Start
Dropshipping businesses are required to find the appropriate product and a good supplier. Drop shipping on Amazon is indeed relatively easy. Once you find the product and supplier, half the job is done. With no logistics or shipping operations to look after, you can put all your energy into creating marketing strategies and crafting listings for your products on Amazon.
2. Requires very little investment
For any inventory or shipping, the money you need to invest in your business is practically next to nothing. But with dropshipping, all you need to take care of is your Amazon selling fees, which is zero in comparison to buying the product in advance. It also gives sellers more room to be more aggressive with PPC marketing. However, you are not buying or holding any inventory; it is an indispensable smaller initial investment than other strategies.
3. Low risk involved
The inventory in ordinary online stores tends to compel the seller to get it poignant on a regular basis, otherwise, the products would become worthless. In dropshipping, the seller doesn’t buy the inventory, in fact, he pays for the product only when he gets an order from his online store.
This is such a safe and guaranteed method where the seller is in no way in danger. If, by any chance, the seller is not able to market the product well and doesn’t get any orders. Still, the seller doesn’t have to pay for anything at all excluding the atrocious marketing which is relatively, much safer.
4. Low budget for business
For any business, especially eCommerce, entrepreneurs have to have a huge budget in place which they use for manufacturing/preparing the product, packing it, maintaining the records, delivering it to the customer and also managing returns and refunds. But, dropshipping has significantly cut down the cost of all of this.
The seller does not need to invest in whatever until there is an order placed and eventually paid by the customer. Hence, the risk involved gets minimised enormously. The money that is needed is only for promoting the business and paying taxes.
5. Easy to work
Managing a dropshipping business from your home since your supplier does most of the work for you. Your biggest job is simply tracking your sales. This one is one of the biggest advantages of drop shipping.
All it needs is the appropriate product and a good distributor, there is no restriction on how numerous categories and niches you can explore. There is nothing that can stop you from plunging into various markets and establishing yourself as a businessman.
Cons of Dropshipping on Amazon
1. Profit margins may not be that grand
The margins you get after paying your supplier all the product costs and any associated handling/shipping fees may not be enough. The best you can do to add up to these cons is to go after a product that has outstanding profit margins.
2. Inventory is not in your control
Having inventory is a good way as it saves you from the hassle of investing. However, inventory is not in your control and it will play a decisive role in business if your vendor suddenly goes out of stock.
3. Not guaranteeing to ship
Inventory and shipping is another aspect of Amazon business hands. It all depends on your supplier’s ability to process the orders and deliver them on time. If only the seller manages to pull it off, excellent, then your business will suffer. This is the only reason sellers must make sure that you find a reliable partner to do business with.
4. Lack of control
In dropshipping business, all the activities are taken care of not by the seller but by some third party suppliers, it’s all a game of uncertainty. You can only trust them but can’t practice control over their activities. If any misappropriation happens then, they won’t come into the picture at all. All responsibility will be of the seller as the customer placed the order from the website.
5. Fees, delivery and returns
Dropshipping services can make it difficult for sellers with low-profit margins. Furthermore, if there is a complication with your order such as late delivery or return to the seller. It is the retailer’s responsibility to handle the issue at hand. Returns can be difficult for a seller if they don’t have any warehouse space or if a drop shipper charges restocking fees.
6. Customer experience control
Dropshipping also removes customization from the seller for specific packaging. Because the shipments come directly from the drop shipper to the customer – the seller doesn’t have the opportunity to include inserts or specialized promotions for their customers. This has a negative impact on your branding efforts and diminishes the customer loyalty relationship.
Amazon dropshipping is valuable provided the supplier is trustworthy, reliable, and knows what needs to be done. Selling products online sure is no cakewalk. Dropshipping on Amazon can be a profitable strategy if it’s done right. However, Amazon’s stringent rules and policy might prevent you from running a traditional dropshipping business, consequently maintain that in mind before you get started.
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