I've long seen drop shipping touted as the pinnacle of self-employment but is it everything that it's promoted to be sticking around to find out. Blogs everywhere advertised drop shipping courses with photos of businessmen and women hanging out on beaches with their laptops happily clicking away as the dollars just roll in I mean it sounds good work from wherever whenever you want to work and that's what they say anyway along with other suspect claims like it's easy or there's no risk well I've got a few things to say about that first I want to dispel the idea that everyone who works from home does so while looking gorgeous in a fabulous location I work remotely myself and usually at home with a basic desk and sweatpants no fancy umbrella drink and no white sand beach at least I'm wearing regular pants
today more importantly I want to end the myth that drop shipping is easy and risk-free while there's less upfront financial risk to drop shipping it's far from 100 safe hazards include high shipping costs low profit margins and little quality control and while you may travel anywhere you like as a drop shipping merchant you may find that you don't have the resources to do so quite as quickly or as easily as you would expect so is drop shipping really worth it in the long run
it may depend on how much risk you're willing to absorb let's first take a minute to define drop shipping what is it exactly drop shipping is an order fulfillment technique in which the online merchant does not store or ship any of their own products instead merchants enter into agreements with drop shipping suppliers wholesalers and manufacturers who agree to pick pack and ship products on behalf of the merchant after the merchant receives a new order on their website they simply notify the supplier and the item is drop shipped directly to the customer the merchant never touches the product while there are definitely perks to drop shipping there are quite a few downsides drop shipping is not easy and it's not risk-free so here are the
top 7 reasons you should think carefully before drop shipping with your online store running a drop shipping business is not the easy money maker it's advertised to be it's work there's so much involved in running an online business like accepting payments and providing customer service and that goes for drop shipping websites as well as a retailer you're responsible for providing customer service placing orders maintaining your website and bringing in online traffic this will all be time consuming and difficult especially if you aren't well versed in web design or seo make sure you have a good grasp of business customer service and e-commerce technology before you even begin
if that doesn't sound like you consider starting off with an easy to use ecommerce solution that offers drop shipping features like a popular platform called shopify while drop shipping may be the most convenient way to fulfill orders it's certainly not the most lucrative yes you'll be purchasing products from a wholesaler but they won't come at rock bottom wholesale prices
you won't be buying products in bulk but rather one by one as your customers order them and that means you won't get the lowest rates possible for your online store what's more you'll have to pay additional fees for the wholesaler to pick pack and ship each customer order and your profit margin is going to suffer accordingly most drop shippers make around 10 to 15 profit
if that big ticket items typically bring in the lowest profit while cheaper accessory products might deliver higher margins and because there's such a low barrier to entry you'll be faced with an overwhelming amount of competition even within your niche many of your competitors will be taking the lowest price possible approach to selling which can also impact your profit margins in order to come out on top you'll have to find a drop shipping niche without too many competitors and make your product listings distinct with quality descriptions
you can read more about how to dropship competitively in shopify's comprehensive guide which is actually a pretty good guide overall I've linked it in the description below shopify also offers a fairly decent webinar on starting a drop shipping business bloggers often advertise drop shipping as the risk-free approach to selling and it's true that upfront risk is very low because you don't have to purchase inventory before you start selling however financial risk is inherent in all businesses and drop shipping is no exception because you essentially outsource warehousing and fulfillment to your drop shipping suppliers your products will go directly to your customers without ever touching your hands that is great convenience
but not so great for quality control you won't be able to inspect products to make sure they're up to snuff and perhaps more importantly you won't be in charge of the whole shipping process it's up to your supplier to get products out on time but your customers will blame any faulty products or delayed shipping on you and that's completely fair after all by choosing to dropship you assume this responsibility in short shipping products directly from supplier to customer may be convenient
but it also puts you at risk for negative customer feedback about factors that are literally beyond your control returns are an unfortunate reality of e-commerce up to 25 of all online purchases are returned with fashion and health and beauty items showing the highest rates with the potential unreliability of drop shipping suppliers you may find that your products are returned more frequently some suppliers are willing to take faulty products back and may even pay for return shipping
but you shouldn't count on it if your customer is dissatisfied with a product you may have to purchase a new product on their behalf and cover shipping expenses out of pocket shipping expenses can add up quickly when you choose to base your business on a drop shipping model particularly when you fill your store using multiple drop shipping suppliers suppose you drop ship clothing using three different suppliers to stock your products
if one customer orders a t-shirt from each of those three suppliers you'll have to pay for each individual shipment instead of just grouping those items together this can lead to significantly higher shipping expenses and it's difficult to find a way to make up for those added costs it isn't a good idea to pass along that expense to your customer as such a high shipping cost will likely cause customers to abandon their shopping carts however neither is it a good idea to pay for separate shipping on three different items my recommendation
if you choose to drop ship limit your number of suppliers it's difficult to be certain of your stock availability under a drop shipping model your ability to fulfill customer orders depends on your supplier stock so if for whatever reason stock levels have dropped dramatically and you're unaware of it you may end up selling products you don't even have on hand and that's a recipe for very unhappy customers granted some suppliers offer apis that give you real-time access to their stock levels which resolves most of this issue so far we've taken a realistic view of drop shipping that happens to focus on the potential downsides of this business model so what about the positives and I agree there are more than a few and here are some of them first you won't have to deal with the expense and effort of storing and shipping products because your overhead will be low you can keep prices down and keep more profits for yourself too you don't have to worry about selling all your stock you purchase only after you've secured the order that means you're not taking a great risk no matter how sales pan out you can get started in no time and with very little money all you really need is a computer and an internet connection because you're not syncing everything you have into manufacturing a single product or line you're free to see where the market takes you when sales of one of your drop shipping products start to lose steam you can add a new product to take its place and even keep the old one in your catalog
if you want drop shipping lets you test related products that your customers might like buying your online store can expand quickly to meet all their needs and even offer some sidelines they didn't know they needed all at very little risk and low cost to you at this point you might be convinced that I take a dim view of drop shipping and you're mostly right I see drop shipping as a largely unsuccessful get rich quick scheme however I'm not opposed to every aspect of drop shipping i think partial drop shipping and outsourcing fulfillment can work very well for some merchants here's how drop shipping works well when it is paired with traditional selling say your store sells high quality dog treats which you store in your warehouse or garage or whatever and you want to branch out into selling dog toys you can easily use a drop shipping model to flesh out your store with these additional products having a few drop ship products will keep your site from becoming fully dependent on your supplier and you can still benefit from the simplicity of the model without being fully dependent on it for your storage profits this is an excellent option for merchants who can't store merchandise in their garages anymore and don't have the time or the personnel to pick and pack all their orders outsourcing your warehousing and shipping to fulfillment providers like shipwire and fulfillright can give you the same freedom that you get with drop shipping but with lower risk you'll enter into a contract with that fulfillment partner so they're responsible for shipping on time and you can still be sure the quality of your products
if your online store is built on the shopify platform you even have the in-house fulfillment option you can read about our take on shopify fulfillment to see if it might be a good choice for your business I've linked that article in the description below the only downside to fulfillment services are fees fulfillment services can be quite expensive you'll have to crunch the numbers to make sure the convenience and smaller staff size is worth it perhaps you're only just starting out and you don't yet have enough sales or products to justify a warehouse in that case there's nothing wrong with fulfilling orders yourself it's cheaper and you can make sure it's done exactly the way you'd like once you have an established customer base you can look to drop shipping as a way to expand your offerings and your profits
if you choose this more traditional route you can still take advantage of some tools to simplify the sales process and make your life easier one solution is to use shipping software to make everything easier once customers place orders you can find reasonably priced shipping software you can use to integrate with your ecommerce platform these make it a snap to calculate shipping rates print shipping labels and packing slips and even access discounted shipping rates to save you money
if you're thinking about building an online site for the first time you should take a look at some of the most popular ecommerce platforms to save yourself some valuable time I'd recommend that you look at our in-depth shopify review as well as our zoe review if you're new to web development I'll link that in the description below if you're fluent in html check out our woocommerce review and our magento review and if drop shipping seems like a good fit for your ecommerce plans check out our complete guide for how to start a drop shipping business
if you like a little of what you see in the drop shipping model but also like the security of creating an online store using a tried and true website builder like shopify take a look at some of the shopify drop shipping apps that are available for you to use you might find that's the best way to get started whatever you decide I wish you luck I hope you find a metaphorical beach to relax on in whatever form it may take and if you like this article don't forget to subscribe to our channel hit that like button and comment we answer every comment so until next time
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