Money Forum > Make Money On Dropshipping > Drop Shipping - Pros and Cons

7/20/2009 11:27:12 PM
Total Posts 137

Drop Shipping - Pros and Cons

The Pros of drop shipping

No need for managing inventory

Retailers can offer a variety of wholesale or retail products without managing inventory. The drop shippers do this for you. Suppliers or drop shippers purchase or get the items from the warehouse and directly delivers it to the retailer's buyer. They are invisible to the buyers meaning the package will be sent using the retailer's contact details as the sender.Retailers save up some space and storage costs. This is like outsourcing a warehouse. The idea here is that you only upload images of your products or product line or you have 1 or 2 stocks which are only for public display.

No need for managing insurance

Retailers do not have to keep up with insurance costs. If you choose not to drop ship the item, you will have to ship it out yourself or look or a shipping company and will pay for the insurance of the product.

No upfront cash out

Retailers have no upfront cash out because you don't buy those items if it is not sold. Isn't it neat?

The Cons of drop shipping

Spend time managing relationship with different drop shippers

Retailers who have had experience with drop shipper's comments on taking up a lot of man hours to establish a good working relationship with different drop shippers. Of course, you cannot limit yourself to just getting one because of the different product lines that you are reselling. The hours spent in making the orders to each drop shipper and the time spent in making sure that the product and service is fast and reliable. You also have to squeeze in time for updating a sales and monitoring system. You are maybe cutting down on your overhead costs but you are increasing your man hours.

No control how you item is packaged

Retailers have no control or you do not see how your item is packaged. Well, I guess it is not on the top of your concern list but still it is a concern. Especially if the item is fragile, you must be very careful with its packaging. If in the process the item is broken then you get an unsatisfied customer and you would not want that because it will taint your reputation not theirs.