Advantages & Disadvantages of the Drop Shipping Model

Time:2010-09-08 19:13:41 Source:Ezinearticles Author:Jenilee Maniti

Drop shipping is becoming more and more popular nowadays. Many people have started making a good income through drop shipping. Drop shipping is a method of retailing that has gained popularity with the onset of online shopping.

Drop shipping is a supply chain management technique where in the retailer does not keep goods in stock, but rather transfers customer orders and shipment details to either the manufacturer or a wholesaler. It is then the wholesaler who will ship the goods directly to the customer. The retailer profits from the difference between the wholesale and retail price.

Some drop shipping retailers may keep items on display in stores, so that customers can inspect an item similar to those that they can purchase. Other retailers may provide only a catalogue or website to display the products they offer.

Advantages of using a Drop shipper

There are several advantages of drop shipping for someone who operates an online business. The main advantage of drop shipping is that there is no start up cost. You can just simply "display" the product you want to sell before you actually buy the product.

The second advantage is that delivery and shipment is being taken care of for you. This is beneficial if you are starting out in a business since you can focus on other important aspects of the business instead of worrying about order fulfillment.

Since you do not need to purchase a huge inventory of stocks, there is no need for you to rent a warehouse to keep your products and you can save on warehousing and overhead costs.

You do not also need to worry about unsold items and keeping an updated inventory. You can even carry out more merchandise from different wholesalers and dropshippers. You can add, change and delete items anytime you want.

Disadvantages of using a Drop shipper

However, as in any business, some risks are involved in drop shipping. One of which is that the product may already be sold-out. The wholesaler does not have any more stock and the retailers would have to wait for a long period of time before the product becomes available. This happens quite a lot when the wholesaler does not keep their inventory up to date as well as the retailers. So communication is very important to avoid creating a bad image to customers.

Like any other business transactions both online and in person, scams do happen and when this happens, it normally cripples the business and can cause customer doubt. What happens is that, scammers create a website and sell products they don't have. Once the transaction and payment has been made, they are nowhere to be found.

Other disadvantages are a lack of control over products' packaging, turn-around time, returns and exchanges and the quality of the products being delivered. You need to deal with the customer complaints since you are directly dealing with them and not the dropshippers.

Top tips for finding a reliable Drop shipping partner

Finding a legitimate and credible dropshipper among the many hundreds available on the internet is something really dreary. Everyone seems to be real and carries the best product in the market. The biggest challenge for the supplier then is finding the right dropshipper. So how will you know if it is the right one?

Ask for a sample, if they won't do this then they are not someone you want to deal with. Another thing is if they ask you to pay via wire transfer which is not traceable. You won't be able to get your money back if they are someone who isn't trustworthy. Others provide links that are not working and fake email addresses.

To avoid these instances, the most important thing is due-diligence. You need to take extra care and caution before making a decision. You need to make sure that the dropshipper is someone what they say they are and can do what they claim. Dropshipper plays a very essential role in wholesale business. And it is no doubt that, a wrong choice of dropshipper may lead your business into failure. Therefore, in choosing dropshipper, you have to be careful.

For drop shipping suppliers, product sourcing leads & advice, community networking and much much more, visit the dropship forum and Register for Free.

Article Source: http://EzineArticles.com/?expert=Jenilee_Maniti

Prev:A Guide to Online Dropshipping
Next:Facts About Online Credit Card Processing Services

Digg

Home

Partners

Related Posts

Recent Posts

Hot Posts