If you have a business that relies on e-commerce to succeed, you know quite well that the convenience of online delivery comes with a price. You can keep your payroll requirements down, you can avoid having a retail store and can reach a potentially international marketplace of millions of customers. But delivering product in a cost-conscious matter will remain a constant chore. There are no in-person pickups like when customers can walk into your shop. Many entrepreneurs handle this by signing up with a drop shipping service. Generally speaking, a drop shipper is the supplier that handles orders on your behalf. They not only ship you bulk product inventory when you need to fulfill huge orders, but will also ship individual orders to clients for you. The purchase can be small, and the shipment goes direct to the customer without requiring your management. It sounds like a fantastic option, but it does come with limitations. Here are some of the pros and cons of drop shipping for your e-commerce business.
It goes without saying that there are a lot of positives to working with a drop shipping company. The biggest one is that you don’t have to keep inventory on hand. This is a huge deal, especially if your products are quite large. You don’t have to maintain a warehouse, or keep stock on hand in order to fulfill an order. That means you can run a business out of a home office, without product inventory taking over your garage or cluttering your guest room.
There are some other solid benefits as well. First on the list is timing. With a drop shipping company in the fold you can launch your e-commerce business in days instead of months. You don’t have to worry about waiting until the product is in your hand, nor do you have to hold off on promoting new products as you bring them to market. There will be less delay for the customer as well. The second you get an order you hand it over to the drop shipping fulfillment house, and the order goes out that day. A drop shipping company will also often work with you to provide a certain amount of stock, if you do need to keep some on hand. And that fulfillment doesn’t have to be bulk either. It’s easy for a small business to stay afloat, and to grow in incremental steps while maintaining a strong hand on expenses.
Yet you do need to be careful when going this route. Not all drop shipping companies are the same. There are thousands of them out there, and many of them are scams. Even if they are aboveboard there is no guarantee that they are well run. You are placing your company’s reputation in the hands of an outside company, which can be quite detrimental if you choose poorly. So you will have to do some serious due diligence before picking a partner.
You will also have less control over shipping methods and the consumer experience. The drop shipping company will send out your product in their packaging, and you can’t always make changes. That will limit your ability to brand the packaging, or to include coupons or other special offers. The drop shipper may not use the most environmentally sustainable packing materials either, which could be troubling if you pride yourself on running a green business. And you will be limited in the shipping speeds and prices you can offer your customer. If the drop shipping company is reliable but just way too expensive you could lose a sale or end up with some very unhappy clients. Make sure you get more information from any potential partner so you know what you are getting your customers into. Issues you miss now will come back as major trouble later.