E-commerce is a great way to reach a very large audience, potentially much greater than the one from a physical store. But not for that reason it is neither easy nor cheap. There is a way to have an online store without having to have the product yourself.
Essentially, a dropshipping service is an ecommerce in which once the customer orders and pays a product, you transfer the order to a supplier (who can be a wholesaler or a small store), the dropshipper, which is responsible for both the storage as of the shipment. In this way, you would be an intermediary between the buyer and supplier who, in reality, will never have the product in their hands.
What are the advantages of dropshipping?
The main advantage is the reduction of costs. An online store that follows this model should not face very high initial costs, for example eliminating the need for provisioning or storage. The fixed costs are much lower than in a traditional ecommerce, while the variable costs will depend on the success of your store. You also get rid of some tedious tasks that can be complicated, such as shipping management and dealing with logistics companies. In addition, it allows the business to be very easily scalable.
Disadvantages of dropshipping
Nothing in this life is perfect, and neither is this model. The main one is the lack of control you have over a good part of the sales process. If your supplier sends a defective product or mismanages the shipment, it is likely that in the eyes of the buyer you are responsible, affecting your image despite not being the culprit of your bad experience.
It can also be problematic (in case of having more than one supplier), that you find that the same order has products from different suppliers, which will imply the possibility that the shipment of these two different packages arrive at different times, something that your client may find it an inconvenience and, on the other hand, your reputation will not be as good for a not so good experience.
General tips for a dropshipping
Gather all the information from your suppliers: make sure they are serious and that they work properly.
- Shipping terms: make sure that your suppliers can make shipments within the promised period and includes the obligation to fulfill them in a contractual clause.
- Report your intermediary status: a failure of your provider may affect your image. Inform the customer that you are an intermediary.
- Negotiate the conditions of purchase: do not accept agreements that include minimum orders or quotas to be able to access the complete catalog.