It’s never been easier to start an ecommerce business. By partnering with third-party logistics (3PL) providers and ecommerce fulfillment services, online shops can now quickly reach a wide customer base without requiring a big investment or a huge amount of effort. While the whole endeavor is still far from a walk in the park, online entrepreneurs can look forward to becoming more financially independent with the right ecommerce fulfillment service provider.
One of the options that many 3PL providers offer online shop owners is drop-shipping. Drop-shipping refers to a fulfillment method where the store doesn’t keep an inventory of the product it sells; instead, the drop-shipping services provider ships the item directly to the customer. This means the merchant can do business without necessarily seeing or handling merchandise.
Is Drop-shipping the Best Option for Your Online Store?
From a store-owner’s perspective, it’s a convenient way of running a business. But just like other order fulfillment methods, drop-shipping has its pros and cons. Let’s take a look at the cons first:- Your margins may be lower with drop-shipping since your drop-shipper will do the heavy-lifting for you.
- It’s very easy to get into ecommerce using drop-shipping, so you can expect a lot of competition. You will have to differentiate yourself from the rest of the pack to succeed.
- It’s not easy to find good, reliable drop-shippers to work with. You might have to rely on trial-and-error if you don’t have a working relationship with a dependable drop-shipper yet.
- You won’t have total control of your inventory. You’ll have to rely on your drop-shipper fully for order fulfillment. This could be a problem if your chosen drop-shipper is not reliable.
The more yes answers you have, the more likely that drop-shipping is for you.
- Are you just starting out with ecommerce? If you answered yes, you probably don’t have enough experience and/or capital. Using drop-shipping services while you’re still starting out makes sense because you won’t have to invest a lot of money from the get-go. You’ll be able to learn by doing, and you won’tshy away from experimenting since you won’t be risking a lot of your own money.
- Do you want to be able to work in any place that has internet? With drop-shipping, you’ll be able to run your business anywhere in the world, as long as you can connect to the internet. Drop-shipping may be for you if you love to travel or if you’re not the kind of person who likes being cooped up in an office space.
- Do you hate having to deal with inventory? If you don’t like dealing with inventory, warehousing, and the hassle of order fulfillment, then drop-shipping is certainly for you. You can sell as many products as you want without worrying about keeping inventory.
- Do you want more freedom in choosing what products to sell? With the traditional way of selling and fulfilling orders, you are physically limited in choosing what products to sell. With drop-shipping, you can choose as many products as you want to sell or you can focus on selling just a few products. You can also choose to stop selling a product immediately without having to worry about your existing inventory.
- Do you want to focus on the more exciting parts of running a business? The back-end side of running a business is usually the more technical part. If sales and marketing keep you fired up, then you can focus on these aspects by allowing your drop-shipping partner to take care of all the back-end work. Feel free to spend all your time and energy winning more customers.
