Dropshipping

#Ecommerce101
What is dropshipping?
Dropshipping is a business model
that allows entrepreneurs to start
an online business and sell
products to their buyers without
ever actually stocking the items
themselves. Instead, when a
dropshipping store sells a
product, it purchases the item
from a third party and has it
shipped directly to the customer.
Advantages of Dropshipping
Less capital is required.
Probably the biggest
advantage to dropshipping is
that it’s possible to launch an
ecommerce store without
having to invest thousands of
pesos in inventory up front.
Traditionally, retailers have
had to tie up huge amounts of
capital purchasing inventory.
You don’t have to purchase a product unless you’ve already
made the sale and have been paid by the customer.

And because you’re not committed to selling-through any

inventory purchased up front, like in a traditional retail
business, there’s less risk involved in starting a dropshipping
store.
Easy to get started

With dropshipping, you don’t have to worry

about:

Managing or paying for a warehouse

Packing and shipping your orders

Tracking inventory for accounting reasons

Handling returns and inbound shipments

Continually ordering products and managing

stock level
Low overhead

Because you don’t have to

deal with purchasing
inventory or managing a
warehouse, your overhead
expenses are quite low.
Flexible location

A dropshipping business can

be run from just about
anywhere with an internet
connection. As long as you
can communicate with
suppliers and customers
easily, you can run and
manage your business.
Wide Selection of Products to Sell
Since you don’t have to pre-
purchase the items you sell, you can
offer an array of trending
products to your potential
customers. If suppliers stock an
item, you can list it for sale on your
online store at no additional cost.
Easier to test
Best method for those who are launching
a new store and for those people who
are looking to test the appetite
customers have for additional product
categories.

The main benefit of dropshipping is,

again, the ability to list and potentially
sell products before committing to
buying a large amount of inventory.
Disadvantages of Dropshipping

Low Margins Inventory Issues Shipping Suppliers

Because it’s so easy to When you’re sourcing Complexities Errors
Even the best
get started, and the from multiple If you work with multiple dropshipping suppliers
overhead costs are so warehouses, which are suppliers—as most make mistakes fulfilling
minimal, many also fulfilling orders for dropshippers do—the orders—mistakes for
competing stores will set other merchants, products on your online which you have to take
up shop and sell items at inventory can change on store will be sourced responsibility and
rock-bottom prices in an a daily basis. through a number of apologize. And mediocre
attempt to grow revenue. different dropshippers. and low-quality suppliers
This complicates your will cause endless
shipping costs. frustration with missing
items, botched
shipments, and low-
quality packing.
Limited Customization and Branding

Unlike custom-made products or print

on demand, dropshipping doesn’t give
you a lot of control over the product
itself. Usually, the product
dropshipped is designed and branded
by the supplier.