Advantages & Problems of Product Dropshipping

Advantages of Dropshipping

Low Starting Cost

The cost of starting an online dropshipping store is next to nothing. You can get started with an online store with as little as $30-50. Realistically, it’s more likely to be an investment of around $100-200 but that’s still insanely affordable in comparison to a traditional business, with start-up costs usually in the thousands. An online dropshipping store doesn’t require you to rent office space, buy specialized equipment, hire staff, buy, store or manage products like a traditional retail business. Your largest “costs” will be in choosing your eCommerce platform e.g. Shopify, buying and integrating appropriate apps such as Oberlo (which is free) and buying your website domain and hosting e.g. www.myshop.com.

Low Risk in Comparison

With low-cost comes low-risk. You don’t have to spend thousands on your initial investment or take the risk of buying and holding stock. You only make a purchase to the wholesaler after someone has made an order through your store.

What’s more, it can take retail businesses months or even years before launch and there’s no guarantee it’ll succeed. Setting up a fully functioning dropshipping store can be done in a day. Realistically, we’d recommend you spend 1-2 weeks on researching, planning and building your store to ensure it has a quality feel, good SEO, and a smooth shopping experience. However, in terms of both your money and your time, dropshipping is an extremely accessible and low-risk business model.

It’s Almost Fully Automated

It’s next to impossible to make any business fully automated but dropshipping is next to impossible to beat. Once you’ve put in the initial work of setting up your store, creating social channels and optimizing your site for your target audience and market, the rest is relatively simple. Because it’s online, there are many online automation tools that make dropshipping an almost fully automated model:

  • Your online store is up and running 24/7.
  • Customers can buy from your site without the need of staff.
  • Integration tools like Oberlo, instantly connect your orders to the wholesaler and make the purchase for you.
  • Email automation sequences, instantly email your customer receipts and follow-up emails for you.
  • You don’t have to ship or track products, the wholesaler does that for you.

Can Operate From Anywhere

When your business is entirely online, you and your business can be based anywhere. Your desk. By a pool in sunny Spain. A tent in Squamish. As long as you have an internet connection and a laptop (these days most businesses can be run on your phone or tablet too!) then you have the freedom of the open road. You aren’t tied down by 9 to 5 working hours, dealing with staff or running and managing a store, everything is online.

No Need to Own or Hold Stock

This one is pretty self-explanatory. You don’t have to buy, hold or manage stock like traditional retailers, you only “buy” a product after someone has made a purchase from your store. Once you’ve placed an order, it is then the wholesaler’s job to ship your product to your customer. Your dropshipping business operates as the middle-man.

Relatively Easy to Get Started

A lot of people might find the idea of setting up an online store as daunting. A few false beliefs people think include:

  • “You have to be business-oriented”
  • “I’m not good with numbers”
  • “I’m not creative enough”
  • “I’m not tech-savvy”
  • “Starting a business costs a lot, I’m not willing to invest that kind of money”
  • “It’ll require a lot of time, which I don’t have”

The last two we have already discussed previously to be false and the reality is that you don’t need any of those skills to be able to set up and run a successful online dropshipping store. There are so many amazing automation tools that make it so simple for you to run your store. From automation tools like Oberlo (dropshipping) to Privy (email marketing) to shipping trackment (Aftership) and performance analytics (Kit) – running and managing a dropshipping business has never been easier.

Lastly, eCommerce platforms like Shopify makes it possible for anyone to set-up an online store. You don’t have to be tech-savvy, nor do you have to be creative. You can use sites like Fiverr.com or UpWork.com to get a professional logo or creative banner made for your store but there are plenty of free and low-cost logo makers and creative tools like Canva that enables you to create beautiful graphics for your business. Everything you need is already out there, most people just don’t know it.

Broad Product Offering

Since you aren’t having to buy or hold stock, dropshipping allows you to explore, offer and experiment with many more products. This means you can:

  • Have a large range of products being sold at your store.
  • Offering more models/variations of the same product, giving your customers more choice e.g. a physical store may have limited space for storing expresso machines, but your online store can showcase many different options.
  • Drop a product if it’s not selling well at no cost to you (since you haven’t bought it or aren’t holding it!) and experiment with a different product or a variation of the same product.

Problems with Dropshipping

  • Long shipping times (if using Aliexpress suppliers)
  • PayPal ban or suspension
  • Chargebacks
  • Customer refunds

Long shipping times (if using Aliexpress suppliers)

Aliexpress suppliers are almost exclusively within China and yet your customers will likely be within Europe, North America, or Australasia. Shipping times to Australasia and parts of North America from China can be reasonable, often within 5-10 days, but to most parts of Europe shipping times can be considerably longer. Long shipping times can not only result in more customer service complaints, it can also put potential customers off from buying from you in the first place as you really should make it very clear on your site about shipping times to different destinations.

PayPal ban or suspension

PayPal can suspend or ban your account if you aren’t honest with your customers on your website. For instance, if you’re using Aliexpress suppliers in China, then you need to clearly state on your site that shipping times can be 2-4 weeks.

Chargebacks

Chargebacks can be requested from customers who do not recognize the charge on their card, so ensure your store name matches the name on your PayPal account, and also ensure customers are aware of the longer shipping times so they don’t request a chargeback due to not having received their order within a week or so.

We recommend you encourage communication with your customers, emailing them of every process in their order, and politely asking for a review after they have received their order. Invite customers to contact you if they have any questions at all. By reaching out like this you will find you get happier customers even if they’re not happy with the shipping times.

Customer refunds

Customers can sometimes request refunds if their order is delivered damaged or not delivered at all. You should have a strict refund policy in place on your site stating that you offer refunds for damaged or faulty goods, or if an item is lost during shipping. Of course, sometimes you may get a customer claiming they haven’t received an item even when you have a delivery confirmation from the courier, or sometimes they may claim it’s faulty even if it’s not. On these occasions, you need to make a decision on what to do. We wouldn’t recommend you accept returns or offer refunds on items that the customer just doesn’t want or like after receiving, so make this clear on your website also.

Author: Aliva Tripathy

Taking out time from a housewife life and contributing to AxiBook is a passion for me. I love doing this and gets mind filled with huge satisfaction with thoughtful feedbacks from you all. Do love caring for others and love sharing knowledge more than this.

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