Most people aren't sure what to expect from being a drop-shipper and allowing other sellers to sell their products, or being a seller who sells a drop-shippers products. There are some issues that may arise along the way. In this post we would like to shed some light on the pros and cons of drop-shipping.
Pros of Drop-shipping
- Drop-shippers can increase their profits ten fold by allowing other sellers to sell their products. In doing this, a drop-shipper or retailer who has spent much money on investing in product can easily and quickly generate profits.
- Also, over a period of time drop-shipping can help your products to become more exposed to various markets.
Cons of Drop-shipping
- As good of a profit that drop-shipping can bring, there are also some downsides to it. One being, allowing other sellers to sell your products ultimately means that you the drop-shipper or retailer is contributing to the success of the competition. Everyone knows that a company, business or website domain name is what bears most popularity and trust, more so than the actual products being sold. So this means that allowing other sellers to sell your products only helps the competition make a better name for themselves. Of course this is also determined by the area that your competition sells to.
Pros for sellers selling drop-shipped products
- From a seller's point of view, selling a drop-shipper's product means that they can literally spend absolutely nothing on product investment and turn a decent profit if not a very high profit. This is becoming the preferred choice for doing business nowadays as it reaps great short term benefits.
Cons for sellers selling drop-shipped products
- One of the con's of selling a drop-shipper's products means that you risk not being informed of out of stocks. In many cases can you end up selling products to your customers that your drop-shipper currently doesn't have in stock. This means you will soon be refunding your customer. This can cause a lot of frustration for your honest customers and possibly discourage them from ever buying from you again.
- The second issue or con with doing business like this is that, in the long run a seller who has relied on a drop-shipper for products will always rely on that drop-shipper unless of course the seller is willing to invest their own money into product, given they can even find the right supplier. Ultimately depending on the direction and state of the drop-shipper, the seller will have little or no choice as to how long they stay in business.
- Another common issue with selling products that you don't actually have or haven't actually seen is that people have different opinions of what "good quality" is. What this means for your business is, customers may not be entirely satisfied with their order. This is due to the seller having a lack of knowledge about the product, the product quality and the drop-shipper's business operation. Over time this can reduce the trust that your customers place in you and reduce the amount of referral traffic.
- The horrible unavoidable problem about drop-shipping is that, your drop-shippers sell prices are almost always lower than yours. In some instances where both you and your drop-shipper sell on the same platforms such as Ebay.com or Bonanza.com, your drop-shippers sell prices will almost always be lower than yours. When your prices and their prices are matched up side by side, the buyer is almost always in favor of the lowest cost to them. At many times this is completely unavoidable.
It goes to say that there are equal risks when it comes to selling a physical product. Rather you drop-ship or sell someone else's products, there will always be risks. Investing in product could result in a waste of money should the market slow down or change it's trendy course. Selling a drop-shippers product at times means that your successful business and it's future is determined by the drop-shipper.
From experience we have found that a key ingredient to building up a successful businesses is investing in an actual physical product inventory. Customers are more likely to get what they purchased, fewer customers purchase out of stocks, your prices are not over priced and remain competitive, and the longevity of your business is more secured.