Monday, 30 January 2017

What are the pros and cons of dropshipping? – Part 2

Last Friday we focused on all the pros that come hand in hand with dropshipping. Today, we’re examining the cons.

Lower Margins
Lower margins are considered to be the biggest negative of dropshipping. The margins are even lowered further when working in a competitive niche. The costs involved in getting into dropshipping means many people use it as a way to set up shops and start selling. They often invest only small amounts of money; some have poor quality websites and no customer service, but potential customers will still refer to them to compare prices. Commonly, the consumer will pick the lowest price they can find. Profit margins can easily disappear when competing. To reduce the problem, it’s advisable that you pick a suitable niche for dropshipping.

Issues with Shipping
When you use dropshipping you have no control over the inventory. The supplier is the one who keeps the supplies and you have to rely on them to satisfy the demand for your customers. The suppliers have many other customers and they have their own suppliers too. Their inventory levels change daily and can result in products being out of stock when the customers place an order. Customers can find this frustrating; especially if they have paid for the goods before learning that they will have to wait for them to come back in stock. One way to get around this is to use systems that link the inventory levels to your website, ensuring stock levels are updated in real time automatically. However, not all drop shippers have this technology and some systems aren’t reliable.

Issues with Supplier
Problems can arise with dropship suppliers.  Technical issues and communication errors may happen and you will need to work hard to solve problems together and keep your customers happy.  You’ll be the one making the apologies and fixing the issues, even if it was the fault of the supplier.

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