Starting a dropshipping business can be extremely exciting since it is a great first step into the world of entrepreneurship. You can sell to customers without holding any inventory. You don’t need to pay for products upfront. And if you’re committed, you can build a sustainable source of income in the long run.
But before you get started with dropshipping, it’s important to understand the pros and cons of this eCommerce fulfillment method.
What is dropshipping?
Dropshipping is a retail fulfillment method that allows retailers to sell products without having them in stock. When a dropshipping retailer sells a product, they purchase the item from a third party (a manufacturer or wholesaler) that ships the product directly to a customer.
With this method, the seller acts as a middleman between the manufacturer and the customer. Dropshipping is particularly advantageous for resellers and affiliates who benefit from a low-risk sales experience, reducing their own overhead expenses while growing their business.
The pros of dropshipping
According to the latest data, the dropshipping market size is set for growth, it’s estimated to hit $301.11 billion in 2024 and $372.47 billion in 2025. This order fulfillment method is popular for resellers looking to mitigate inventory risk and increase business flexibility. Listed below are the pros and cons of this order fulfillment method.
Minimized start-up risk
Dropshipping drastically reduces the initial costs of starting an online business since you don’t have to invest thousands of dollars in inventory upfront. And because you’re not committed to selling any inventory purchased upfront, there’s less risk involved in starting a dropshipping store. This can be less risky for new and small businesses.
Easy to start
With dropshipping, you don’t have to worry about managing or paying for a warehouse, packing and shipping orders, handling returns, or tracking inventory. Without the worries of physical stock, your eCommerce store can run leaner, allowing you to focus more on what made you successful in the first place: your customers.
Wider selection of products to sell
You can keep on top of trends and swiftly add new products to your online store any time you feel the need to. You can also quickly switch up your offerings without first having to order new items or clear out backstock.
Low storage cost
One of the great things about dropshipping is that you don’t need to keep products on-premise, and the manufacturer handles order fulfillment. For this reason, the cost of storing products is non-existent.
The cons of dropshipping
Inventory issues
The first con of dropshipping is inventory issues. When you own inventory it’s easy to keep track of them. But when you sell products from different suppliers (who are working with other retailers) it’s more difficult to ensure that the products you need are readily available for your customers.
Shipping complexities
With dropshipping you don’t have control over the supply chain. If you work with multiple suppliers, the products on your online store will be sourced through a number of different dropshippers. Let’s say that a customer orders two items, each from different suppliers, each with different shipping costs. You’ll need to determine how to charge the customer for shipping in a way that the customer won’t feel overcharged.
Limited customization and branding
Dropshipping doesn’t give you a lot of control over the product itself. Usually, the product dropshipped is designed and branded by the supplier. Some suppliers can accommodate your business’ product changes, but even then, the supplier has the most control over the product itself.
Highly competitive
In the eCommerce world, it’s always important to pay attention to what your competitors are doing — but even more so as a small business. This is because you don’t have the scale and brand awareness that established businesses do; you need every advantage you can get. If you’re not proactive in combating their presence, they can drastically affect your sales.
How can you overcome the challenges of dropshipping?
Make online shopping a pleasure
From ordering to delivery, you want to make the experience as seamless as possible for your customers. That starts with a user-friendly customer experience. You want to invest in building an elegant online store that is easy to use and simple to understand. Since you have little to no customization and branding space, you need to make sure that at least your online store reflects your identity and it caters to your audience.
Focus on quality
You should remain vigilant about the service you receive from the suppliers. You need to connect with suppliers that complement your services and stand out from the competitive crowd.
Build a trusted business
You should also work to boost your online credibility to ensure customer trust. This will guarantee long-term success. From building a robust social media presence to creating successful email marketing campaigns, forming strong relationships with your customers will help ensure the success of your dropshipping business.
Conclusion
If you’re looking to generate more revenue, then look no further than dropshipping. The dropshipping model eliminates the need for product storage, the risk of damage or loss, and the need for returns or refunds.
With thousands of businesses already trusting UCX, this platform is the future of no-inventory selling. We help brands empower their sales and revenue streams, and achieve their business goals through this model of selling.
Generate income and exposure with UCX! Talk to our team to learn how.