Is Dropshipping Right for My Business?
By Tisha Hedges
If you don’t have a lot of money to invest in your business, don’t have inventory space and not sure what you want to sell… then yes! Dropshipping could be right for your new online business.
With dropshipping, you don’t have to purchase any inventory, stock, pack, label or ship the products yourself. This can save time and money for the beginning online business. There are of course, pros and cons with dropshipping and using a Wholesale Supplier that offers a drop ship service. But first…
What is Dropshipping?
First, let me explain what dropshipping actually is. Dropshipping is not something new or something that has been invented in the last 20 years. Many wholesale suppliers started offering this service decades ago.
Remember mail order catalogs that you used to get or still continue to get in the mail? Most of those products were dropshipped. See those ads on TV? Most of those products are dropshipped.
Simple explanation of dropshipping is… you don’t hold inventory and your Wholesale Supplier will ship the product on your behalf to your end customer. You just collect your retail price and shipping cost from the customer, order from the supplier and they will do the rest!
Simple right?
Dropshipping Pros
The biggest pros with dropshpping, is that it keeps your initial costs down & saves time. You don’t have to purchase a lot of products and be full of anxiety wondering if you can sell those products. There is no renting warehouse or storage space since you aren’t stocking products. These types of overhead costs can quickly run you into debt before you even really get started.
The other pro is that since you don’t have inventory, you don’t have to take the time to pick, pack and ship the products. Time = money.
Dropshipping Cons
The biggest cons with dropshipping products are wholesale pricing and loss of control. You see, when you are purchasing one product at a time at wholesale, your wholesale costs are higher because you are not buying in VOLUME.
Wholesale pricing has different structures, but it always comes down to… the more you buy, the cheaper each individual item gets. So it’s hard to compete with large retailers that are stocking brick and mortar stores that need to purchase hundreds or thousands of the same product to fill their warehouses & store shelves.
The other con is loss of control. You do not have control over your shipping costs or when products are shipped out, which if you sell on eBay or Amazon, could mean bad feedback for your business.
Making the Cons Reasons Tolerable…
So how do you soften the cons? Well, when you are looking for what to sell, test products that you can’t find in your local Wal-Mart or other chain stores. Wal-Mart doesn’t carry everything! There are thousands and thousands of products and brands that they just don’t sell.
Once you find those products, then check your competition online to see if you could compete in that market.
The loss of shipping control con… choose dropshipping wholesale suppliers that will ship 24-48 hours after receipt of your order. Choose suppliers that offer tracking numbers and stay on top of what was ordered, and what was shipped out. Communication with your wholesale supplier is key when using a dropshipping service.
Wholesale Alternatives
If you don’t feel that dropshipping is right for you (like if you sell on Amazon), then you always have the option to purchase inventory and ship the products yourself.
Inventory or No Inventory. That is the only retailer alternatives.
However, you don’t have to spend thousands of dollars. We coined the term “light bulk wholesaler” This is what we call wholesalers that have minimum orders of $500 or less. That way a newer retailer with smaller capital and less warehouse space can get better wholesale prices on the products without spending A LOT of money up front.
Our Directory of WBI Certified Wholesalers contains thousands of wholesale suppliers that offer these lower minimums if you want to have that shipping control & lower wholesale prices.
Something that you might not know is, a lot of these wholesalers had much higher minimums when we first connected with them. But we asked them to lower it specifically for our members so they can be included in the Directory. So many of these suppliers previously advertised much higher minimums before talking to us!
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