Dropshipping is a method of retail order fulfilment that allows for a business to outsource their stock to a third-party supplier. This third-party supplier then ships the order to the customer. The product seller acts as the middleman and does not have to interact with the item directly, meaning they can focus on running their business without having to worry about the warehousing, storage, or picking and packing process that comes with online retail/ecommerce store customer orders.

Dropshipping products from your ecommerce platform to a dropshipping company can be a cost-effective way for beginner retailers to establish a presence within the industry.

What Are the Benefits of Dropshipping?

Ideal for Small Businesses and Startups

Given the expensive nature of setting up and running an online retail business, establishing a physical location and presence can be hugely daunting financially. Opening a dropshipping store and sending your products to a third-party supplier can be a lot cheaper than traditional retail methods - sourcing warehouse space, hiring staff etc.

Effectively, you are able to manage your ecommerce store from wherever you have an internet connection!

Better Cash Flow

Traditionally, retail businesses would have to wait a certain amount of time for their purchased products to arrive before selling them to the customer. During this waiting period, the business has spent a substantial amount without being able to make it back.

The dropshipping business model allows you to sell products and pay providers simultaneously (or even prior to).

With dropshipping, you receive payment for the products at the same time you pay your providers - or before. This means you can invest more money into marketing and growth.

Less Risk to Test Out New Products

To keep your customers engaged, product innovation is pretty much a no-given, but the apprehension towards expanding into unfamiliar territory can limit store owners and entrepreneurs from growing their business.

Dropshipping allows you to experiment with new product lines without spending too much. If you are still finding your feet as a new ecommerce business retailer, this can be invaluable to the efficiency of your supply chain, as well as your market research. If you find that customers are not engaging with a new product, you can easily remove it from the storefront.

What Are the Cons of Dropshipping?

Supply Chain Control

It could be argued that due to the indirect order fulfilment process, you can expect to be less hands-on with your online business’s product supply chain.

As a growing business, this may seem daunting, as having less control could mean you are less accurately assessing the quality of your products. At DEVLND, we work closely with all our clients to make sure your products reflect the quality of your business.

Brand Establishment

Dropshipping your products often means sacrificing credit for your work, as more often than not, customers will be focused on the product, rather than the general shopping experience.

Because of this, it could be said that dropshipping is more effective for more established brand retention, as opposed to helping small business’s make an impact with their customer experience/branding.

Legal Liability

While this problem is uncommon in the dropshipper industry, it’s still a legitimate hazard for and online retail business owners.

A potential issue is when dropshipping suppliers use another company’s branding on packing slips/ packaging your products are sent in. It goes without saying that this can have a hugely negative impact on the customer’s overall experience of your retail business.

You can avoid this issue with a Dropshipping Agreement. This is a contract between you and the supplier that defines the conditions in which your products are shipped to your customers.

For a simple, no-hassle, reliable fulfillment process for your online store, choose DEVLND as your third-party inventory management company. We are experienced in handling all types of products, and have everything you need to help grow your business.

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