The Pros and Cons of Dropshipping in 2024: Is It Worth It?
Time to read 16 min
Time to read 16 min
You're likely curious about dropshipping after coming across it online, wondering if it's as great as it seems.
Don't worry! I'll provide a thorough and honest overview of the pros and cons of Dropshipping, covering everything without overlooking any detail.
Not only will I be upfront about how this business model works, but I'll also share some tips towards the end on how to handle the downsides of dropshipping. But before that, let's define what dropshipping is.
Dropshipping business is a retail method where the seller doesn't stock the products they sell. Instead, when a product is sold, the seller buys it from a third party and has it shipped directly to the customer.
This means the seller never physically handles the product. The pros of dropshipping include low initial costs, flexibility in location, and the ability to offer a wide variety of products. However, there are downside of dropshipping: profit margins can be low, there's limited control over stock and shipping times, and customer service challenges can arise if there are issues with an order.
To explain it more simply, here's our infographic that does a great job of showing how dropshipping works.
If you want to learn more about dropshipping, I recommend checking out the article linked below:
"Dropshipping for Beginners: Dropshipping Business Ideas"
Now that you're familiar with the basics of this business model, let's dive into the pros of dropshipping.
Why is dropshipping great? Let's discover the reasons!
Dropshipping is a way to sell products online without having to buy a lot of them at once. Normally, when you buy in bulk, you purchase many items of the same kind all at once. This is cheaper per item, but it means you need a place to store them all. If you're not sure whether these products will sell, you could end up with a lot of unsold items.
With dropshipping, you don't face this problem. You only buy a product when a customer orders it from your online store. This way, you don't have to invest in a large number of products upfront. You can test if a product sells well without the risk of having unsold stock.
However, once you find a product that sells well, it might be a good idea to start buying in bulk. Buying in bulk has its advantages, like lower prices per item, but you should only do this when you're confident about the product's demand.
There's also a point where you should consider stopping dropshipping. If a product is consistently selling well, and you're sure about its market demand, then buying in bulk could be more beneficial.
For more details, you can read our this article How And Where To Buy Profitable Dropshipping Stores
Starting a dropshipping store is cheaper compared to traditional online stores with their own inventory. The main reason is you don't need to buy products in bulk or pay for warehouse storage. This significantly lowers your startup costs.
However, starting a dropshipping business does involve some expenses. It's important to understand these costs, which are detailed in another article we have. Remember, dropshipping is a real business, not a quick way to get rich.
Compared to a normal ecommerce store with its own inventory, the costs of running a dropshipping store are much lower. But each type of store has its benefits.
For example, if you open a dropshipping or an online store, you won't pay rent like you would for a physical retail store. Instead, you might use a service like Shopify, which can cost as little as $39 per month on their lowest plan. This is a big difference compared to the rent and maintenance costs of a physical store.
Drop-shipping is great because the supplier does everything - shipping, storing, and making the product.
All you need to do is market the product, and your dropshipping supplier will take care of everything else. Amazing, isn't it?
However, not being able to see the product is a drawback because there may be problems with its quality. (More details below)
You can add new products to your store easily without needing to find a place to store them.
Drop-shipping is a way to fulfill orders without keeping inventory.
The rest of online shopping stays the same. You'll still learn skills like:
Even if you stop doing drop-shipping, the skills you learn from it are still useful for other things.
Dropshipping is popular because it's much easier and quicker to start than a traditional retail store. Here's why:
Less Upfront Investment: In dropshipping, you don't have to spend money upfront like in a physical store. You only pay for products when someone buys them from your online store.
Don't worry, I'm not suggesting you rush to create your dropshipping store. It's actually better to spend more time making your store unique. This way, you'll stand out from other dropshippers who quickly set up their stores in just a few hours. Taking time to build a distinct and appealing drop-shipping store is a smarter approach.
If you want to learn how to make your drop-shipping store more unique, I recommend reading my article on the topic. It can provide you with valuable insights and tips.
You can also purchase ready-made drop-shipping stores from Shopifico and start drop-shipping within a day. All Shopify drop-shipping stores are ready to launch, and each store is well-optimized for SEO. There's no need to hire an SEO expert to optimize your store. The choice is yours.
With dropshipping, you have the potential to sell to customers worldwide. This is because your dropshipping supplier can ship products to almost any country. However, it's important to check with your supplier before you start advertising in a new country, just to make sure they can ship there. In rare cases, your supplier might not be able to deliver to certain locations.
Now that we've looked at the pros of dropshipping, let's discuss its cons. Often, people promoting dropshipping don't talk about these downsides. They tend to describe dropshipping as an easy path to wealth. This leads to the first major drawback – the mindset issue:
You might have heard a lot of people saying dropshipping is an easy way to get rich and live a great life without much work. But, there's more to it than just the good stuff they talk about.
Realistic Mindset is Key:
I'm here to give you the full picture of dropshipping, focusing more on the challenges than the benefits. While these challenges aren't too big and can be handled, most people who promote dropshipping don't talk about them much. So, let's dive into what you really need to know to start a dropshipping business with a clear understanding.
I'll give more than just basic info. I'll also give tips to overcome dropshipping challenges.
Here's one important tip:
Remember, drop-shipping is a genuine business, not a quick scheme to get rich. Treating it seriously and having the mindset of running a real business is half the battle. With the right approach and dedication, you can navigate the cons of dropshipping more effectively.
When you have a store, especially if you're dropshipping (where the products are sent directly from the supplier to your customer), there are things you can and can't control.
What You Control:
What You Don't Control:
Why It Matters: If your customer has a problem with their order, like how long it takes to get to them or how it's packaged, you can't do much. This is because you don't handle the order processing, shipping, or refunds yourself - the supplier does.
When you're starting with dropshipping and not making money yet, don't stress too much about things you can't change. For example, if you're using AliExpress, there are some limitations you can't do much about.
What You Can't Change with AliExpress Dropshipping:
But, There's Good News:
When You Start Making Profit:
You're drop-shipping. You won't see the product. This means there could be problems with its quality, and you won't find out until it's too late. One day, you might wake up to lots of customer emails complaining about their product.
If you're concerned about the quality of the products you're dropshipping, it's a good idea to order a sample first.
What is a Sample?
Why Order a Sample?
Ordering a sample is a great way to make sure your customers will be happy with what they receive.
When you're running a drop-shipping business, there are many things you don't have control over. One big issue is stock availability from your supplier.
What Could Happen:
The Good News:
When you're dropshipping, it's important to keep track of how much stock your supplier has. Sometimes, if you're selling a lot, your supplier might run out of the product. But don't worry, there's a simple solution:
Stay in Touch with Your Supplier: Regularly ask them about their stock levels and how quickly they can get more.
Have a Backup Plan: If your main supplier runs out of stock, you can switch to another one. On platforms like AliExpress, you'll find many sellers offering the same or similar products. So, you have options.
Prepare in Advance: Before you even face a stock issue, contact other suppliers. Ask them the same questions about stock and delivery times.
By doing these things, you can make sure you always have products to sell, even if one supplier runs out.
Dropshipping has a hidden cost: you don't get the lower prices that come with buying in bulk.
Here's How It Works:
More Expensive Per Item: When you dropship, you buy items one at a time. This is usually more expensive than buying a lot of items at once (bulk pricing).
Dropshipping vs. Wholesaling:
Why Dropshipping Costs More:
What It Means for You:
One way to make more money in dropshipping is to sell more products.
Here's How it Works:
Selling More for More Profit: If you make $10 profit on each product, selling 10 products gets you $100. But if you sell 100 products, you make $1000. It's all about selling more to increase your total profit.
Another Approach: High-Ticket Dropshipping:
So, you can either sell a lot of cheaper items for smaller profits per item, or sell fewer expensive items but make more profit on each one.
When you're doing dropshipping, especially from China, there are a couple of challenges you might face:
But remember, choosing the right suppliers can help reduce these problems. Good suppliers might have faster shipping or better quality products. However, there's always a risk of these issues happening in dropshipping.
When you're dropshipping and need to handle refunds or returns, you have a couple of options:
Send a New Product Without a Return: Sometimes, it's cheaper to just let the customer keep the faulty or unwanted product and send them a new one. This can save on shipping costs and hassle.
Who Pays for Returns?
This decision depends on what's more cost-effective and how it might affect customer satisfaction.
Before starting a drop-shipping business, it's important to know the pros and cons. If you decide to pursue drop-shipping, good luck! If you're unsure, check out successful drop-shipping stores for inspiration. If you have any questions or suggestions about this article, feel free to comment or contact me directly.
The pros and cons of dropshipping present several advantages and challenges for those considering this business model. Let's explore the benefits and drawbacks.
When engaging in dropshipping, the supplier plays a crucial role in shipping the products directly to customers on behalf of the online store. This shifts the inventory management responsibility to the supplier.
The pros of dropshipping include reduced capital investment as retailers don’t need to maintain a warehouse or manage inventory. Also, the profit margins can be higher due to the dropshipping model.
While dropshippers benefit from not handling physical products, challenges such as high shipping costs, shipment delays, and potential customer service issues can arise.
Yes, dropshippers can work with multiple suppliers to offer a broader range of products. However, this may also introduce complexities in supply chain management and shipping.
Dropshipping can offer the potential for higher profit margins due to low overhead compared to traditional retail. However, fierce competition and the
Dropshipping is a completely legal way to do business, but you need to be careful and do your research, especially if you're selling to people in different countries. Here's what you need to keep in mind:
It's important to understand these rules to run your dropshipping business smoothly and legally.
Drop-shipping is a way of selling products without keeping them in stock. When a store sells a product, they buy it from someone else and have it sent directly to the customer. This means the seller doesn't have to handle the product themselves. The main advantage is that it saves money because the business doesn't need to store products or manage a warehouse.
Looking for dropshipping suppliers takes some effort and research. Here are some common ways to find them:
Use Google: Search for the kind of product you want to sell. Then, contact the companies you find directly to see if they do dropshipping.
Online Directories: There are websites like Zendrop, SupplierHQ, Syncee, or Spocket where you can find lists of suppliers. Some of these sites even let you use their suppliers directly for your business.
Contact Manufacturers: Reach out to the company that makes the product you're interested in. Ask if they do dropshipping or if they can give you a list of their distributors. Then, you can ask these distributors if they do dropshipping and how you can work with them.
Trade Shows and Networking: Going to trade shows for your product's industry is a great way to meet suppliers face-to-face. You can find new suppliers and build relationships with them this way.
These methods can help you find the right suppliers for your dropshipping business.
Drop-shipping is a good option for certain types of businesses, especially if:
However, drop-shipping might not be the best choice if: