Is Dropshipping Worth It? The Pros and Cons
Dropshipping: why it won’t help you build a multi-million dollar online store
If something seems too good to be true, as the old saying goes, it likely is. And in the case of dropshipping, all is not what it seems for both the buyer and seller.
Despite e-commerce sales projected to reach nearly $2.5 trillion worldwide in 2022, it is no wonder that growth in the online store is also increasing. For example, Shopify has seen its platform’s number of merchants rise at an average rate of 74 percent per year since 2012.
Whether you want to start an e-commerce company that is completely achieved by dropshipping or merely supplementing your current offer without an upfront stock, you need to know the facts first.
What is dropshipping? Is Dropshipping Worth It
In a nutshell, dropshipping is a business model where the stock it sells is not owned by an online store. Instead, when a customer places an order, the store purchases that item from a third party that will then ship it directly to the buyer.
In other words, the online store is a middleman, taking orders from consumers and then delivering them on their behalf to a distributor or producer.
The method is often believed to be a seller’s get-rich-quick scheme. The internet is riddled with videos, forums and online tutorials by people who claim to have made thousands of dollars by setting up a dropshipping shop, sometimes overnight.
Dropshipping sounds like a no-brainer on the face of it: no first-time investment and no stock to store. The retailer never even gets in touch with the items he or she sells in most situations. But it’s more complicated than that in fact.
Dropshipping is not a new phenomenon
Dropshipping may well be the cant du jour of e-commerce; however huge corporations have used it for years to assist scale their businesses.
Take Zappos, as an example. once the net shoe large initial launched, it consummated orders with drop shipments. However as chief operating officer Tony Hsieh explained in Harvard Business Review, the system was blemished from the point.
“We didn’t have one hundred pc correct info regarding our vendors’ inventory and since their warehouses were everywhere the country, delivery times weren’t predictable,” he said. “As an associate degree e-commerce company, we must always have thought of repositing to be our core ability from the start. Trusting that a 3rd party would care regarding our customers the maximum amount as we tend to do was one in every of our biggest mistakes.”
Is Dropshipping Worth It
Similarly, before Amazon began building its own warehouses, it conjointly relied on wholesalers and distributors to ship CDs and books on to its customers.
Home merchandise e-tailer Wayfair doesn’t stock most of the merchandise it sells either. Instead, makers ship orders to patrons as a result of, as Wayfair member Alex Finkelstein told Boston Globe, “you can’t stock five hundred completely different completely different} couches in seventy-five different colors in a very warehouse.”
also, you read these Make In India | Digital India & its Importance