Market Insights | In Spotlight
Is Dropshipping Worth It
Apr 01, 2021 | Sanchit Rai

Advantages | Disadvantages |
(1) No risk and no cost of maintaining an inventory. The items are stocked in the supplier’s warehouse and get dispatched as the orders come in. | (1) You have no control over your supplier’s inventory. The supplier fulfills for multiple retailers like you from the same warehouse. This could surprise you someday! |
(2) Lower cost of starting a business as an e-retailer on Shopify or Amazon. You don’t tie up your scarce capital by buying merchandise in bulk. | (2) High competition with other e-retailers who follow this model. Low margins are almost a given. |
(3) No worries about handling packaging, shipping, returns, and inventory replenishment. | (3) Private labeling and branding (aka customization) are very hard. This is a huge disadvantage in today’s market where brand building is essential to differentiate yourself |
(4) Flexibility of running a business from virtually anywhere in the world. Brick and mortar don’t restrict you. The overhead cost of business is low when you can work from home. | (4) Dropship model is suitable to typically made in China, mass-produced goods. You can’t sell upscale handmade products which are typically batch produced in smaller quantities. These are the high-margin products that you really want to sell these days. |
(5) Easy to experiment and test many product verities and categories. You can curate what you want to sell in your online shop. Curated choices make for happy customers | (5) Poor choice of dropshipping supplier can backfire badly if the customers receive substandardly, not-as -advertised, badly packed merchandise. Your reputation will be at stake with no fault of your own |
(6) Easy to scale your business if the demand ticks up. Good dropshipping suppliers smoothly accommodate and process an increase in orders |
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