Pros & Cons of Drop Shipping for eCommerce Merchants
You want to have your own eCommerce store, but you are not sure of profit returns or may be lacking in funds. Now you can kick start your eCommerce store with a minimal amount for your start-up before you invest.
In drop shipping your capital is not blocked in maintaining stocks or inventory, you can merrily invest in other profit making business. You display products of other manufacturer’s or wholesalers in your eStore, once your consumer places the order and makes the payment. You can directly ask your manufacturer or wholesaler to ship the product directly to the customer, by issuing a purchase order.
Every alternative process do have pro’s and con’s, let’s discuss the pros of drop-shipping and later cons of drop-shipping:
- Your initial investment will not pinch your pocket, as you are not investing much on your start up.
- Your capital won’t be blocked as you are not purchasing beforehand or keeping stocks.
- You can take the risk with new ranges of products, explore new business aspects.
- You can display a diversified array of products from different supplier or manufacturers. As you don’t have to maintain stocks or inventory.
Cons of drop shipping:
- You can’t keep high-profit margins, as you are the third party, you are actually acting as a bridge in between manufacturer and consumer.
- You will face issues regarding product from your consumers, you are not sure whether the stock available is updated or not.
- You may face problem in order processing because of your supplier’s error, as the orders are outsourced, your customer might face problems regarding order updates, shipment and delivery.
- As you get the option of dealing with diversified products, with that comes too many suppliers, so it increases your business complexity.
Drop-shipping is a good idea if you are thinking off to start up with the eCommerce business. This is like a trial period where you can check whether the goods you are offering your consumers are appreciated. Gradually, if you are receiving the positive response from your consumer, you can easily take the next step of creating your own channels in eCommerce. To execute your business effectively use an ERP with your eStore, there again if your e-business runs in high volume use a connector which can connect your eStore and ERP to streamline your business.