What is Dropshipping? Definition of Dropshipping, Dropshipping Meaning and Concept
Dropshipping is a sales method in which the retailer does not have the items in their warehouse, although they do have them advertised in their online store. When you sell a certain item, you buy it from a wholesaler and they are the one who sends the product directly to the customer.
An online store can have the products it sells in the store in its inventory, and it may be the same to manage and ship the product directly, or opt for this option called dropshipping.
In this case, even if these products are included in the showcase of your electronic commerce, if an order arises, it will resort to requesting it from the manufacturer who will be the one who sends the product to the customer. This article never passes through the hands of the original online store, but the shipping management is already the responsibility of the wholesaler.
Many online stores have decided to opt for this method of sale. One of the main reasons is that it represents savings when investing in the acquisition of products.
In summary, thanks to this sales technique, it is possible to sell without having stock, placing the order with the supplier, and that it is this who is in charge of the management and subsequent sale to the customer.
What are the advantages of dropshipping?
These are the most prominent:
- It is not necessary to have a warehouse, or a physical place to be able to store and keep the products you sell.
- You don't need to invest too much capital up front. If someone wants to launch an online store, it is a plausible option to start without spending a lot of money.
- You avoid having to manipulate and manage physical products, manage payments, manage and send orders, be aware of returns, have exhaustive inventory control, among other heavy tasks that you save by choosing this option. sale.
- Fixed costs are not very high. By forgetting all of the above, you don't need too much, except for a computer, a platform, domain, and hosting for the online store, and basic maintenance costs.
- You do not have to have a local, or physical site, you can work from anywhere, from home, or an independent office, so the flexibility is total. The only requirements that are essential are to have fluid contact with customers and suppliers.
- By using suppliers and not having to have a warehouse, or the prior purchase of items, you can include a great variety in your online store.
Disadvantages of dropshipping
Dropshipping also has a number of disadvantages:
- The profits are not exorbitant since the margins that are gained with the products are somewhat limited when operating in this way. However, as the investment and fixed costs are so low, this way of selling over the Internet can be interesting .
- Having several suppliers can be a headache, because you do not have full control of the inventory. If you have the products in stock, you know what is there, and what is not, but in this case you have to establish communication and synchronize the inventories to always be informed of what is available, or not. This is not so simple, especially if you have a wide variety of manufacturers.
- Shipping costs can be another problem. For example, if a user buys six products and all of them correspond to different suppliers, they will apply their shipping costs for each corresponding product. So the selling costs can be increased and it can be an unattractive price for the customer.
- The stress generated by trusting and delegating to suppliers is something that must be taken into account, since if they make a mistake, or fail in shipments, the image of the online store can be affected.
- Customer service cannot be something that is left ostracized, but special attention will have to be paid in case these problems previously mentioned arise.
If this option is carried out, other types of issues cannot be neglected. Questions such as choosing an effective online platform to host the store; take care of the contents, such as the blog; or the product sheets, since they can make a difference and make a customer stay or go to another website; as well as having specialized providers in this option, which will make it possible to avoid many problems.