Do You Have What It Takes to Manage A Dropshipping Business?

At first glance, a drop ship business may be easy to manage. Aside from being highly scalable, you do not need to do a lot of work up front. This is why most people prefer to open an online shop because they were expecting it to be easy. The truth of the matter is that it is much harder to manage a drop shipping store than a traditional online store. In this article, we shall discuss the basics of such kind of business and determine whether you can handle operating such business.

The Process

In dropshipping, you as the retailer will market a product and list it on your Shopify website. When the item is sold, you collect payment from the customer and order the item from a supplier/wholesaler. The latter will then ship the product straight to the customer. There are many reasons people prefer them as an alternative to owning inventory.

The retailer does not hold the inventory

In this business model, you do not directly own an inventory. As such, you do not pay the cost of carrying inventory. Having stocks means you will have to pay various costs such as storage, labor costs, investment risk costs, and capital investment. By not having inventory, you do not have to worry about tracking available merchandise.

The retailer is not involved with the shipping process

Once the order is completed, you will not have to worry about shipping the item to the customer. It will be the job of the supplier to ship all the order to the customer.

Some Products May Be Too Difficult To Stock and Ship

If your inventory includes oversized products such as refrigerators, stocking and shipping the item can be costly and cumbersome. In this case, the drop shipping model can satisfy orders by distributing directly from the wholesaler.

Customers pay before you ship

In eCommerce, you are not required to pay for the merchandise upfront. As you will not have to invest in inventory, the supplier can then offer a wide range of products without huge financial risks.

You Have Responsibilities Too

If you think that the supplier is doing all the work that you can sit back and relax. Think again. You will be the one who will deal with your customers. You will have to answer all the questions. You will also be the one to apologize if an order is delayed.

To remedy this, you can use several distributors or suppliers to distribute the order. But then again, you will have to worry about different shipping times and locations.

If the order will be delivered by different distributors, they will end up receiving 3 different packages at different times. If the order is time sensitive and needs to be rushed, you will have to make sure that all suppliers can deliver the product on time.

In effect, the reputation of your lifestyle business and linking yourself to your distributors can be at stake. If one distributor becomes unreliable, then it will have a negative impact on your ecommerce store. All of these can make or break your business. As much as possible, maintain a good image and reputation for your business.

Understanding the process itself can help you decide whether or not you will pursue such kind of business. If you decide to push through, your knowledge of the process will also be key to your success.