Benefits and Disadvantages to Drop-Shipping Products

When deciding whether or not to drop-ship items to your customers, there are many things to take into consideration.  Drop-shipping has many benefits and just as many disadvantages.  So how do you determine if it’s the right thing for you to offer?

In this post we’ll try to highlight some of the reasons TO drop-ship and some of the reasons you may NOT want to.

First, what IS drop-shipping?  Drop-shipping is essentially when a store owner lists a product for sale that they do not have in stock.  When a customer purchases the product the store owner places an order for that exact item to be shipped directly to the customer from the distributor.

Benefits to drop-shipping:

  • You can offer more items and product options to your customers without having to invest upfront in stock of that item.
  • You can try an item in your store, via drop-shipping, to see if it’s going to sell well for you before investing in the line.
  •  You can sell more items without fear of overselling, knowing that you can drop-ship it to your customer if you run out of stock.
  • Drop-shipping is great for new retailers who may not have the initial funds to invest in all the inventory they wish to retail.

Disadvantages to drop-shipping:

  • Often there is a drop-ship fee associated with having an order sent direct to your customer.
  • You are NOT in control over whether the product ships in a timely manner.  You should only drop-ship items from distributors who have drop-ship policies in place that you can trust.
  • There is a chance that the item you want to drop-ship may be out of stock at the time you need to order it.
  • If your customer’s order contains more items then you will need to send them separately from the drop-ship and it will result in you paying double shipping, plus a drop-ship fee if applicable.
  • You are NOT in control of how the drop-ship item is packaged or presented to your customer and most often will not be able to include your literature, business card, branded packaging, etc.

Overall, drop-shipping works well for some and can help boost sales by allowing you to offer more than you’d otherwise be able to.

It is important however, to recognize that you will not profit as much from the sale of drop-ship items and that your reputation is always at stake.  Take caution when choosing who to drop-ship with.  You certainly do not want to have to be explaining why your customer didn’t receive their item or why they were sent the wrong one.  Many companies assume no liability and provide no support to your customer.

So, as a store owner have you had success with drop-shipping?  We’d love to read your comments.

 

Enhanced by Zemanta
This entry was posted in Blog and tagged , , . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *