Dropshipping is a business model where you ship product from the supplier directly to the customer; you don’t need to hold any inventory or have any expensive overhead cost. Drop-shipping is very inexpensive; however, there are some negatives associated with the dropshipping business model. Let us talk about the positives and negatives related to dropshipping. That way, you can make an educated decision on whether or not dropshipping is for you.
Positives Of Dropshipping
There is no denying that dropshipping is one of the easiest and the least expensive business model to start, mainly because you don’t need a large upfront investment, and you don’t need to hire workers. With that being said, let’s talk about the positives of dropshipping.
1.Low Start-up Cost
Dropshipping has a low start-up cost, which makes it a less risky business to start. All you would need is $30 a month for Shopify hosting, and you will also need some money for advertising, ideally around $600. But if you don’t have $600 to start with, you can always stay within your budget. The end goal here is to make more money than you spend on advertising. Some great places to advertise would be Facebook, Instagram, and Google. Make sure to try all three platforms for advertising, and see which one works for you.
2.Easy To Set Up
It’s straightforward to set up your store with dropshipping and have it running; all you will need is a Shopify website and images of the product. You can find products on aliexpress.com, as the products are inexpensive, and you can profit from them. Since you won’t be buying any products upfront, you don’t have to wait for the products to reach your home or warehouse, and you can start selling them right away.
3.Easy To Find Out Which Product Sells & Which Doesn’t
It’s much easier to test and find the most profitable product for your store since you don’t have to spend money on inventory. Make sure to try and test as many products until you find a winning product. Once you find the winning product, make sure to stick with it until you reach its saturation point.
4.Can Start Dropshipping From Anywhere
You can start dropshipping from the comfort of your home or even when you are traveling. The beautiful thing about this business model is that you have full control over what you do. Many successful drop shippers travel the world while making sales from their dropshipping store, and if you put in the effort to find a winning product and build a brand the right way, you can be doing the same. But wherever you are around the world, you can start dropshipping and earn cash.
5.Products Are Easy To Find
It’s effortless to find products regardless of the niche you are in; aliexpress has all types of products, from bracelets to cameras. You don’t need to worry about running out of products to sell, which means you will likely find products that will make you money. But always remember to look for items that are already selling. You don’t want to start promoting items that aren’t trending, especially in the beginning.
Negatives Of Dropshipping
Just like any other business model, there are some negatives associated with dropshipping. Keep in mind that with proper sourcing and hard work, you can mitigate these negatives. Dropshipping is not a get rich quick scheme, the people who think that are the ones who fail when dropshipping.
1.Slow Shipping
Ecommerce stores like Amazon have spoiled customers into believing that one-day shipping should be the norm, but with websites like Aliexpress, you can expect shipping times to be 7 to 14 business days. This could lead to fewer returning customers and many complaints, so make sure to be prepared and mention your shipping times on the sales page.
2.Subpar Product Quality
The products you buy from aliexpress might not be made of the best quality. Low quality products can lead to more returns and bad reviews. We recommend that you purchase the product to check it’s quality, and if you think the quality is good, then proceed to sell that product on your website. Adding this one extra step will allow you to have more returning customers and fewer returns. Remember, customer satisfaction is essential if you want to make money in the long term, make sure to check the product before selling.
3.Returns Can Be Difficult
Since you are not shipping the product from your warehouse, you will have to ask for your client to return the item to you, and then you return the item to your supplier. In some cases, the supplier won’t accept your return, leading you to refund the customer out of your pocket. This whole process can be annoying, to say the least, so make sure always to have a conversation with the supplier and lay down your ground rules before you start doing business with them.
4.Low Profit Margins
The profit margins with dropshipping can be as low as 5%, which means you make 5$ out of $100 in sales. Of course, profit margins can be as high as 30%, but you need to have some experience and have the right supplier. If you increase your conversion rate and focus on getting free traffic to your website, you can make a higher profit margin, but don’t expect a decent profit margin when you first start your dropshipping business.
5.Hard To Brand Products
Since you will be getting products manufactured and shipped from the supplier, you won’t have any say on how the product should be made. If you want to start a brand, you can begin with dropshipping and eventually start producing your own products.
Final Verdict
Dropshipping can be a lucrative business model, but don’t expect it to be a get rich quick scheme. Make sure to focus on finding the right product, supplier, and optimize your ads to convert into a sale. With some trial and error and hard work, you can have a successful business.