Pros and Cons of Ecommerce Dropshipping

If you currently source your own inventory, you might be surprised to know that ecommerce dropshipping can be a prudent alternative. But, really, only you can decide what’s best for your store. In the meantime, here are some basics to consider.

Pros

The main benefit of this retail fulfillment method lies in its cost savings to the seller. Simply put, ecommerce dropshipping requires less capital and less overhead than traditional inventory processes.

And this is what makes it an attractive option, particularly for new store owners.

What’s more is that you’ll be able to offer a wide selection of products because you won’t have to handle the inventory yourself.

Or deal with any minimum order requirements. Jennifer Xue from StartupNation points out that the dropshipping model allows retailers to sell products without having to worry about sourcing for large quantities of each item.

Of course you still need to be available in order to resolve any delivery issues or problems your customers may have. If not, you risk receiving some pretty ugly reviews.

Cons

While ecommerce dropshipping makes it easier for you to manage inventory and save money, there are also inherent risks involved in this strategy.

These include everything from low margins as a result of price wars and cut-throat competition to inventory issues and headaches. Not to mention shipping complexities, supplier errors . . . and more.

To be clear, any and all of these risks can—and likely will—arise at any time. And you must be ready.

Bottom Line

So what to do??

The most important thing is to understand that a good shipping strategy not only takes proper planning and consideration, but also a commitment to resolve any problems, ASAP. No matter where the “fault” lies.

That said, ecommerce dropshipping can be a very effective business model to help you stay competitive without having to spend a lot of money. Xue sums it up best by explaining how it creates an equal playground for all online retailers.

And then she adds, “Expect to see more e-commerce stores adopting this model in the future.”

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