Dropshipping – this term appears more and more in connection with online shops. But what exactly is the dropshipping strategy and is it worth using it for your online shop? We want to get to the bottom of these questions in our article!
What does dropshipping actually mean?
First of all, what exactly is dropshipping? This term is a type of e-commerce in which the online shop dealer offers and sells goods that he does not have in stock himself. When a customer buys a certain product, the retailer orders it directly from the manufacturer and sends the goods to the customer.
More information about the term You can find dropshipping in our lexicon .
What are the benefits of dropshipping?
The dropshipping strategy is particularly suitable for online shop beginners, as you only need a small amount of start-up capital. So you can get started right away without a lot of start-up capital.
Another advantage over the conventional strategy in which products are purchased in large quantities is the cost savings. Since you don’t buy goods in large quantities with the dropshipping model, you can save the storage costs for these. In addition, dropshippers do not have to worry about excess products, as the goods are only bought from the manufacturer when a customer has ordered the product.
In addition, you can offer a whole range of products and test which products sell well and which less, since there are no storage costs. Thus, dropshipping is ideal for online shop beginners who first want to orientate themselves on which products can be profitable or do not want to be limited to one industry.
What are the cons of dropshipping?
One of the biggest drawbacks is customer satisfaction. Since you do not send the goods yourself with the dropshipping model, you are fully dependent on the timely dispatch of the manufacturer. If the product shipping is taking longer than expected, you will need to deal with customer complaints.
Another disadvantage associated with shipping is the possibly higher shipping costs for this model. Often customers do not just order one product, but several at the same time. If these now have to be obtained from different manufacturers, double shipping costs can arise for you. You could of course bill the customer for this, but this will very likely result in losing the customer.
This leads us to another disadvantage associated with the business model: the low profit margin. Since you purchase the products individually, you cannot benefit from a volume discount. You can of course try to offer the products at extremely higher prices, but you will most likely not have much success. Therefore, you should try to find a specific niche where you can make a profit. Another option is to invest in marketing to build your profile.
Like every business model, dropshipping also has advantages and disadvantages, which we have briefly presented to you. Dropshipping is an innovative model that is particularly suitable for beginners. You can offer several products and find out which area is the best for making money. It is therefore ideal for gaining initial experience in online business.
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