Clearly, knowing the Advantages and Disadvantages of Drop Shipping Business Opportunities is valuable. Chiefly, these pros and cons give significant indication whether this is the right business model for you. For sure, knowing the Advantages and Disadvantages of Drop Shipping Business Opportunities can help in your decision.
This post brings to light some Advantages and Disadvantages of Drop Shipping Business Opportunities.
Even though this model can be a viable online business, due diligence is a big deal before you commit fully. To emphasize, it is important to know the Advantages and Disadvantages of Drop Shipping Business Opportunities before you take on this online business venture.
Firstly, research is a key factor. Point in fact is discovering unique products with a demand. No doubt this can be like gold for your success. Embedded in your mind then: is finding the right products to sell. Certainly, this is the winner.
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Advantages of Drop Shipping Business Opportunities
Low Cost to Start: Notably, you can start this online business with little or no cost at all. That is definitely a big deal. For instance: Oberlo, Wholesale Central and Dropship Direct offer free start up. Of course this ensures no risk at all with your money.
Like just about every newbie, you don’t want to risk even a penny when you are trying out a new product or service. Equally important is that you are not sure of the financial outcome, so try with a few products first.
Keep in mind that with Drop Shipping Business Opportunities, you don’t have to think about a warehouse to store products. In like manner, there is no bulk order. By the same token, this eliminates the task of packing and shipping products to customers. Likewise, there is no concern about getting rid of overstock items on a warehouse shelf.
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Make and Save Money: Obviously, there is nothing to lose financially from inventory. With this in mind then, you can have your own business up and running. Key point is that you can save money knowing that there is no rent for storage and warehouse space.
Additionally, you don’t have to deal with paying employees. Furthermore, you have the advantage of buying low cost and sell for a profitable mark-up. In other words, you get the wholesale price for products and sell them at a higher price.
To clarify, you only purchase a product after a customer makes an order and pays for it. Certainly, this sounds cool enough, but you still have to do the promotion work to earn money.
3 Easy Steps to Follow
- Create a website and you can do so for free
- Discover suppliers
- Promote and sell products
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Advantages of Drop Shipping Business Opportunities
Small up-keep Cost: Key point is that there is little or no overhead cost, so this can be a win-win business model. To emphasize, there is no cost for rental space, and no bills to pay for electricity, water and phone. Notably, your only cost to start is for a website if you did not build a free one.
Low Cost For Products: These days, drop ship suppliers can easily source products at a low cost. In fact, most of the suppliers are from China and they have business dealings with manufacturers. As a result of this, sellers pass on low wholesale prices to you. With this help, you can sell products at the market price and benefit from all the profits.
Many Products to Sell: Markedly, there are hundreds of products that you can promote and sell on your website. Chiefly, you can sell just about anything. However, having a niche with products on demand is the most viable way to go.
Start Selling Immediately: Important to realize that you can actually pull off a sale soon after you join a drop shipping company. Needless to say you need to promote the products to get sales.
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Ideal For Anyone to do: Whether you work full time or part-time, you can certainly earn extra money with Drop Shipping Business Opportunities. As a matter of fact, this is ideal for the unemployed and even college students.
Low Risk: Testing how well products will sell through drop shipping is an ideal way to see which products to focus on. Of course you can do this with several products and little or no risk. Even though you promote the products, they may not sell. In this case, you still do not lose any money because you did not pay for any products upfront.
Work From Anywhere: As long as you have a computer that is connected to stable internet service, you can work from anywhere. Assuredly, there is no limitation as to where you can work. Not to mention in bed or on the beach, you can still rake in profits.
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Disadvantages of Drop Shipping Business Opportunities
On the negative side, here are a few caveats.
Sourcing of Products: When it comes to finding products, there is no doubt that you want the best prices. Key point to note is that a manufacturer usually have better prices than a wholesaler. For this reason, you may want to source products from a manufacturer. However, this may require much research especially on alibaba.com for instance.
On the other hand, your niche and your location also play a key role with sourcing and drop shipping. Undoubtedly, these factors affect the prices of products to you and your customers. Surely, paying higher prices can influence your profits.
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Strike up a Good Relationship With Suppliers
Accountability is Completely on You: To point out, when customers don’t get the right order, or get low quality products, you are totally responsible. There is no blame on the supplier. For these reasons, you need to protect your reputation. By all means, you can strike up a good relationship with suppliers. Equally important is to order sample products and test the quality.
Remember, the supplier takes your order, packs and ships the product, and you never see it. Again, sample orders can be a saver. Once things are not working out smoothly, every blame is on you, so building great relationship and testing samples are key. This goes to show that reliable suppliers are significant.
Hard to Brand a Product: Generally, it is hard to customize drop shipping products and make it your own. If you would like to do your own private label, your chances will be better with the manufacturer. In the event that you really want to brand a product, you can can check suppliers on alibaba.com. For one thing, you want your product to be unique.
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Cons: Drop Shipping Business Opportunities
Shipping Problems: When you sell several products from different suppliers, it may increase your profit, but this can bring on a shipping cost problem. If each supplier charge a different price for shipping, that can certainly be a quandary. Of course, this depends on the type of product and the shipping location.
High Competition: Undoubtedly, Drop Shipping Business Opportunities attract many people who want to start an online business. Needless to say the competition is high in almost every niche. Being unique stands out for sure.
Inventory Management Problem: If you don’t have up to date information on low and out of stock inventory, there can be a problem with customers. Surely, you don’t want customers to order products that you can’t fulfill.
Important to realize that a drop shipping company with trustworthy suppliers are key to your success here. Unless the company has inventory alerts in place, keeping up to date with what is available can get difficult.
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Concluding Thoughts
Knowing Advantages and Disadvantages of Drop Shipping Business Opportunities give you a clear idea whether you want to try this online business model. By all means it is a risk free opportunity, so why not give it a try?
Hope you are happy with your experience at theworkathomebusiness.com. If you have any questions, concerns or suggestions please let us know. Feel free to share this page or leave a comment.
Carol
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Hi Carol,
Thanks for a very informative and balanced post on the advantages and disadvantages of drop shipping. You see a lot of people advertising the benefits and ease of drop shipping but giving very little information on the negatives. With this post, I think a reader thinking of starting a drop shipping business can do so with his or her eyes wide open. I think you did a great job of anticipating the type of problems as well as opportunities that a person thinking of such a venture needs to be aware off. Very nice job!
Hi Thabo,
Thanks for visiting. Glad this post offers helpful information. That’s definitely my aim.
Hi Carol,
I’ve never started this type of business yet, and it’s good to know some of the disadvantages. All you ever hear is how easy it is, so it’s refreshing to hear both sides.
Is Alibaba the best place to find manufacturers?
Cheers,
Suzanne
Hi Suzanne,
It certainly not as easy as some people describe it. You really have to do some work. Alibaba is certainly a great place to find products. You can read my latest post about Alibaba here.
Hi Carol,
I was looking into drop shipping for a new business idea good thing I read your advantages and disadvantages of having a drop shipping business. How do I know that these manufacturers are trustworthy?
Hi Kelyee,
It’s good to know you found this post. It is really hard to know reliable manufacturers when you are a newbie. SaleHoo is one drop shipping company that has verified suppliers. Rest assured that they have already done that leg-work for you.