Drop shipping is a low-risk business model that allows you to sell products without the obligation to deliver it to consumers. In this model, the seller doesn’t have to keep their products in stock. They make a purchase from the drop shipping supplier who is responsible for shipping products directly to the consumers. As a result, the seller doesn’t need to handle the product directly. They only have to use online marketing to find customers, transfer the orders to suppliers and receive a commission. In short, dropshipper will buy a product at a low price place and sell it somewhere for a price higher. The commission depends on your ability to choose the right products and find the best drop shipping wholesalers.
Because of the number of eCommerce activities taking place around the world, drop shipping is still profitable in 2020. In this article, we will point out the Advantages And Disadvantages Of Drop Shipping in case you are going to apply this business model. We also provide an overview of the most popular drop shipping companies and many drop shopping service coupons and deals that you can start your drop shipping business. Let’s check it out.
1. Advantages Of Drop Shipping
Low-Investment Business: Perhaps the biggest advantage of drop shipping is that you can start a business online without having to invest large sums of money on the inventory of products. In this model, you don’t need to stock the drop shipping products and pay for it until it’s sold.
Easy To Get Started: Starting an online business is easier than traditional business because you don't have to:
- Manage and pay for the warehouse
- Packing and shipping of orders
- Keep track of inventory
- Handling customs declarations and domestic shipments
Low Cost: Since you don't have to deal with inventory purchasing and stock management, your costs will be pretty low. In fact, many successful drop shipping businesses are setting up a home office with just one laptop and spending less than $100 a month. As you grow, these costs may increase, but still less than in traditional businesses.
Flexible Location: A drop shipping business can move anywhere with an Internet-connected device. As long as you can easily communicate with your suppliers and customers, you can start and manage your home-based business.
Product Type Selection: Because you don't have to pay for the items you sell, you can offer a wide range of trending drop shipping products to your potential customers. If drop shipping supplier provides a catalog of goods, you can list them all on your website for free.
Easy To Scale: With a traditional business model, if you want to increase sales, you will have to spend much time and effort than usual. In drop shipping model, most of the order processing work will be handled by the supplier, allowing you to scale your sales with little effort.
2. Disadvantages Of Drop Shipping
Low Profit: Low profit is the biggest downside to a highly competitive drop shipping business environment. Because of its easy access and minimal investment and operating costs, many merchants will follow this business model.
High Cost of Goods: In fact, when stocking retailers sell the same product with drop shippers, they usually have to pay less. Stocking retailers usually get better pricing, marketing incentives, additional bonuses, inside information about the product line, access to deals, among many other advantages. This is because they have a direct relationship with the manufacturer who makes the products they sell.
Stock Shortages: Sudden stock shortages are one of the most common problems for dropshipper. If consumers suddenly rush for a particular product, supplier may sell out, leaving you in a situation where you don’t have any products for your customers.
Inventory Matters: If you transfer orders to many different drop shipping wholesalers, it will be difficult for you to keep track of where your goods are. There are a few ways you can better synchronize your inventory with suppliers, but these solutions are not always possible and not all suppliers will support technology for you.
Customer Service Issues: Although drop shipping saves your budget by removing the responsibility of delivery, it also takes a big part of the customer experience out of your control. Unless you know when your drop shipping product is being shipped out, the tracking information, and the arrival time, there’s no way for you to guarantee that a product has arrived as described and on-time. Additionally, when a customer calls you to complain or ask questions about their shipments, you do not often have the necessary information on hand.
Supplier’s Fault: Even the best drop shipping supplier sometimes makes the mistakes of fulfilling an order such as loss of stock, damage to goods and poor packaging, which will hurt your business.
3. Most Popular Drop Shipping Companies
Spocket: Spocket could be a great drop shipping marketplace to begin and scale online stores. Spocket helps retailers to connect to thousands of suppliers, many of them are located within the US and EU. Spocket also provides a variety of subscription plans, including a free drop shipping subscription.
Spocket Promo Codes & Discounts
AliExpress: AliExpress is a wholesale and drop shipping platform based in China that is owned by the Alibaba Group. They connect drop shippers to suppliers and products. This marketplace offers millions of products from suppliers in more than 40 niche categories. They also offer a free drop shipping AliExpress subscription.
AliExpress Coupons & Voucher Codes
SaleHoo: SaleHoo is an e-commerce company specializing in global trading between drop shipping wholesalers and retailers. It is one of the largest wholesale directories on the Internet and one of the first to offer international wholesale contacts. It costs $67 for a one-year SaleHoo membership. This is all you will ever pay to be a member of SaleHoo and to access all of their resources.
Doba: Doba is a marketplace that empowers retailers and wholesale suppliers of all sizes to easily connect and do business. With Doba, you can easily scale your dropship sourcing. Millions of products, hundreds of suppliers, all are in one catalog. Their basic service plan starts at $29 a month. You can take Doba 30-day free trial before making a decision.
Doba.Com Coupons & Special Offers
Wholesale2B: Wholesale2B is owned by Onlinestorebiz.com LLC, founded 15 years ago as a software development company with a focus on drop shipping software. Wholesale2B mission is to help the online entrepreneur get started with a drop shipping business quickly and efficiently. They now have more than 188,179 customers, 116,681,145 products synched, connection with over 100+ drop shipping companies.