Pros and Cons of Dropshipping for Home Based Business
Let’s start with the basics of drop ship business. Dropshipping is a kind of service offered by some wholesalers who are looking to distribute the products more efficiently. It is done in the following way: you launch a website where buyers will be able to see the assortment of goods you are planning to sell. Once an order comes to you, you redirect it to the wholesaler along with the wholesale cost of the product. The wholesaler then sends the product right to the buyer, and so you get profit that is the difference between wholesale and retail price of that product.
Benefits
First and foremost, you don’t have to make an initial investment for a stock of goods praying that they get sold. No, you’re going to work solely on orders. An order makes a sale, and there can’t be such problems as old stock.
Going further, your overall expenses are just little if compared to those in some other kind of business. You don’t have to arrange a storage space for goods, pay for shipping goods, etc.
Being relieved from such tasks as buying and placing stock, packaging and shipping goods, and so on, you get lots of free time to spend on other endeavors, and even on the development of your drop ship business.
The fact that you don’t have to bother about storing and shipping goods grants you to choose from a wider range of products. For instance, you have no restrictions as for selling huge goods, and can even offer to select patio furniture.
Pitfalls
Most often, you are going to purchase single items at wholesale prices. Should your buyers order multiple items, you might not anticipate further discounts for purchasing more goods. One more downside to drop ship business is that you’ll be paying a drop ship fee to the supplier. These might be fees for inconvenient shipping location, or some other kind of fees, that serve to cover some additional overheads sustained by the supplier.
You can anticipate that from time to time you’ll be facing some problems concerning delivery. For instance, there can be delays on the part of the drop ship supplier that can have negative impact on your business. If you happen to change the wholesaler, try to test them before taking orders from buyers. Thus you’ll get an idea of the services provided by the supplier and the time it takes for them to handle your orders.
All in all, it can be said that drop shipping is a pretty convenient way of selling goods under certain conditions: you are careful, you manage to determine a profitable market niche, you manage to find a reliable supplier, you apply certain marketing efforts to promote your business.
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