What is Dropshipping? The benefits and limitations of dropshipping

What is Dropshipping? What are the advantages and disadvantages of this model? Let’s find out through the article below from LEC Group!

What is Dropshipping?

Dropshipping (drop-ship) is an English term. According to the dictionary, delivery skips shipping. That is, there is no need to buy and store goods like an agent, the delivery of goods to consumers will be done by the partner. Currently, the dropshipping model is very famous in the world.

Viewing: What is Dropship

A good example from the famous computer company Dell also has a worldwide business network expansion line through dropshipping.

Businesses that use the dropshipping model just need to do good online marketing to find customers. When a customer orders a product, you transfer the order to the parent company for them to deliver the product to the customer and charge you a commission.

The benefits of dropshipping

1.No need to have too much capital:

You can completely start an online business without having to invest a large amount of money in inventory. Meanwhile, if you do business in the traditional form. You need to have a small investment for inventory.

For the dropshipping model, you won’t have to buy any products unless you’ve sold the guy and the customer has paid. Because there is no cost to invest in inventory. So you can absolutely start a successful dropshipping business with very little capital.

2. Easy to get started:

Starting an online business is often easier. Since you won’t have to deal with material goods. Using the dropshipping model, you won’t have to deal with issues of:

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Manage or pay for inventory.Pack and ship orders.Track inventory on books.Process declarations and inbound shipments.Continuously order products and manage levels. inventory.

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3. Low cost:

Because there is no investment in purchasing inventory and managing inventory, management costs will be low.

4. Flexible location:

Businesses using dropshipping can easily move anywhere with an Internet-connected device. As long as you can communicate with your suppliers and customers easily, you can start and manage your business.

5. Easy to scale:

When using dropshipping, most of the additional order processing work will be handled by these suppliers. This will allow you to scale up your sales without spending too much effort on increasing sales.

Disadvantage of dropshipping

1. Low profit:

Because the dropshipping business model is very easy to start with low investment and operating costs. There will be many merchants setting up a store and selling bargain items in an attempt to increase sales. They usually invest very little to start a business and can afford to operate at a low level of turnover.

2. Inventory issues:

Once you stock up on items, it’s very simple to keep track of what’s in stock or out of stock. However, when you have supplies from many different warehouses, also order from many other merchants. It will be very difficult for you to keep track of where your goods are.

3. Complex transportation:

If you work with multiple vendors the products on your website will be sourced from different vendors. This will make transportation more complicated.

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4. Vendor error:

You will be responsible to the customer in the event of defective goods from the supplier. Even the best dropshipping provider will still make mistakes when completing an order. In this case, you will have to take responsibility and solve the problem with the customer.

Above are all the shares about dropshipping. Hopefully, with this article, you have gained a lot of useful information for yourself. If you are looking for a company that provides complete and professional logistics services. Please contact LEC Group from today!

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