Dropshipping is a business model where you can sell goods without needing to produce or stock them in a warehouse. Most starting entrepreneurs love the idea of dropshipping as a business because it has low overhead and it does not require you to own a large inventory. But this does not mean that this business model has no drawbacks.
The idea of dropshipping as a business was popularized with China-made products. If you want to start this kind of business in the UK, you need a sourcing agent from China. The agent will be the one to look for quality and affordable products that you can sell back home. Dropshipping is when you act as the middleman by closing the sale but letting the manufacturer ship the items directly to your customers. Most of the time, you won’t even see the items.
Why Should You Choose Dropshipping?
If you want to start your own online business but don’t have the money yet to produce or buy a whole inventory, you can try out dropshipping. It has a low upfront cost since you pay for only what your customers are ordering. You don’t have to produce the items, nor do you have to rent a warehouse for your inventory.
You also don’t need to hire people to track the orders, label the products, pack the shipment, and send the orders to your customers. The manufacturer or another company will do all these things for you. All you have to do is to take the order details and payment from the customer.
It is less risky to go into a dropshipping business because you don’t need to get stuck selling only one item. You can test new items whether they will bring more profit since you pay for only what you sell.
How Risky Is Dropshipping?
There are fewer risks in a business model like this. But this does not mean that dropshipping is a perfect business opportunity. You don’t have any control over the quality of the products that you are selling. Although most manufacturers are willing to send you a sample of the products, you have no way of knowing that these are the same products they’ll be sending to your customers.
You are also reliant to your partner’s inventory. If they somehow run out of supply and fail to mention that, you may be selling items that are no longer available. This will put you in a bad light, and you might lose customers to other businesses. Also, dropshipping means that you are not in control of how long it will take before the products arrive on your customers’ doorsteps. It might take a week or sometimes more. This can be annoying for your customers.
Dropshipping also produces a low profit. Since you cannot buy the items in bulk, you are not eligible for bulk pricing. If you want to earn more in this business model, you will have to sell more items.
Dropshipping is a great alternative for people who want to start a business but don’t have the capital to do so for now. If you want to prosper in this business, you need to look for high-quality products and reputable manufacturers. In a sense, you are at the mercy of the manufacturers you will choose to partner with.