Dropshipping

Dropshipping is a business model based on selling retail products directly over the Internet, without the shopkeeper having to keep these products in stock. To do this, the retailer enters into agreements with online platforms, manufacturers and/or wholesalers and, ultimately, they ship the order to the end customer. In dropshipping, on the other hand, you sell a wholesaler’s products on your website in exchange for a percentage of the sales, with the wholesaler taking care of keeping the stock, preparing the order and delivering it to your customers (this process is transparent to the end customer). It’s a business model that allows you to create an online store without investing in any kind of stock and requires very little investment.

1 Advantages of dropshipping

Compared to setting up a conventional online store, in which you have to have stock and take care of logistics, the advantages of dropshipping stores are very diverse: – They require little initial investment. It is, in a way, the cheapest way to create an online store to sell products. You don’t have to stock products, pay rent or take on their distribution. – You don’t have to worry about logistics. You won’t have to deal with one of the aspects that can cause the most problems when managing an online store, because you don’t have to control the logistics of distributing the items you sell. – Easily scalable. As an online store, you can add as many references as you like and manage the information on your site as you wish. – Low fixed costs. Normally, only one person is responsible for managing a dropshipping store, which means you don’t need a warehouse (no stock of goods) or a team to manage it.

2. Disadvantages of dropshipping

As you might expect, dropshipping involves a number of disadvantages that anyone thinking of opening a dropshipping store should be aware of: – High competition. Just like you, there will be many other dropshipping stores selling exactly the same products. So you’ll have to fight them all and make sure your SEO strategy is top-notch in order to bring traffic to your store (something that’s not easy to achieve). – Be careful with your supplier. When the wholesaler provides you with the online store (sales platform), you won’t be able to edit the product cards and that means saying goodbye to SEO. If that happens, working with SEO will be very, very difficult. – Very small margin on sales. You will only receive a small sales commissions, so you’ll need to sell a lot to get a relevant income. – You don’t control the quality of the products or their delivery. It’s your store, so if the quality of the products isn’t what you expected or the delivery is late, you’ll be responsible to the customer. – Stock problems. When you are responsible for the stock of goods, you may be directly aware of the products and the stock available. As this is delegated to another company, they don’t always provide you with an up-to-date inventory and this can cause problems with delivery times.