What Is Dropshipping? Pros And Cons Of Drop Shipping For Sellers, Manufacturers, And Customers
You’ve probably heard of dropshipping, as it’s been around for a while now, but you may not actually understand what it is.
In short, it’s an order fulfillment method for products.
Let’s explore dropshipping in more detail and find out what the pros and cons are for sellers, manufacturers, and customers.
What Is Dropshipping?
To understand dropshipping better, let’s look at it from the seller’s point of view.
If you want to sell products online, you can easily do so without needing any inventory and barely any startup capital if you use the dropshipping model. You simply set up an online store and partner with suppliers or manufacturers of your choice to sell their products on their behalf.
When a customer places an order, the request is automatically forwarded to the manufacturer; or the vendor or supplier. The manufacturer then sends the product directly to the customer.
So, you do not actually need to do anything with regard to the order fulfillment. You simply get a cut of the profit on each item you sell on behalf of the manufacturer.
Pros And Cons For Sellers
The biggest pros for sellers are that they need no initial outlay of capital and they don’t have to lift a finger for the order fulfillment to be completed.
The only funds required to set up a dropshipping business are the minimal costs it takes to set up an online store, which can be done through platforms like Shopify, WooCommerce, and Magento, as well as sellers’ own websites, and the money needed to promote the business.
The latter is related to a disadvantage, though.
Due to the ease of setting up a dropshipping business, dropshipping is highly competitive. Therefore, to make it successful, sellers need to invest in advertising to get their stores noticed. They can also focus on the right type of niche products to stand a better chance of success.
At the end of the day, if you’re considering becoming a seller of dropshipping products and you want to earn a good income, you’ll need to invest time and money to stand out from the competition.
However, if you’re simply looking for a side hustle that brings in a little extra cash, you could begin a dropshipping business and not actually do much at all once you’ve connected with suppliers and set up your eCommerce stores.
You can get started by using the dropshipping automation software at SparkShipping to connect with suppliers in minutes.
Pros And Cons For Manufacturers
Manufacturers who are part of the dropshipping model see few drawbacks.
The biggest con has to do with customer issues. When a manufacturer partners with a seller who’s going to sell products on behalf of the manufacturer, certain things need to be agreed on, including knowing who is responsible for dealing with customer issues and complaints.
If that isn’t agreed upon by the manufacturer and seller beforehand, it could lead to operational inefficiencies and customer dissatisfaction.
For instance, if a customer’s order doesn’t turn up or doesn’t arrive in an acceptable condition, the customer will want to complain.
Typically, it will be the seller who deals with complaints. But if the seller doesn’t deal with the issue or thinks the manufacturer will handle the issue, it can have a negative impact on the manufacturer.
The manufacturer, or the supplier, may need to resend an item and potentially be out-of-pocket as a result.
Confusion around customer service can also damage a manufacturer or supplier’s reputation.
As for the pros for manufacturers, there are many. Most importantly, they have an easy route to market and don’t have to spend valuable time looking for vendors to sell their products.
Pros And Cons For Customers
For customers, the only major con of buying from a vendor who uses the dropshipping model is the same issue manufacturers face: if customers are not happy with the product or service, they’ll expect a quick resolution.
If they find it’s hard to know who to get in touch with to resolve the problem and the order problem takes a long time to correct, it can result in the customers becoming dissatisfied. They will then take their custom elsewhere.
Such problems don’t often happen though. And apart from that potential disadvantage, customers gain many benefits from purchasing from a dropshipping vendor.
Most importantly, they can find the products they want online easily, complete purchases quickly, and get products delivered fast.