Simple analysis of the advantages and disadvantages of Drop Shipping

UnderstandWhat is Drop ShippingAfter that, let's take a look at the advantages and disadvatages of this business mode, and be aware of it.

Let's take a look

Advantages of Drop Shipping-Favorable Factors

(1) No inventory required

The main advantage of Drop Shipping is that it is a kind of online business that can be done without spending money on stocks or even contacting the goods. If a customer spends $100 to place an order from your store to buy a pearl necklace (the supplier gives you $15), you only need to send the order to your supplier and pay 15 U.S. dollars, and then the supplier directly packs this necklace and sends it to your customer. You will make a profit of $85 from it, regardless of other processes.

You only need to list your products in the store according to the product situation of one or more of your suppliers. You can list the products in the online store if your suppliers have any products. There is no need to actually own them. For these commodities, there is no inventory management problem.

(2) Simple to learn and easy to operate

At present, the Internet is developing extremely rapidly, everything is ready for users, and only need to use relevant tools and platforms to operate.

At present, the more popular Drop Shipping simple operation method is to have ashopify online storeThen useoberloDrop Shipping platform, you can get started, the latter solves the problem of users looking for goods and suppliers.

(3) Less investment, quick results

This so-called investment is the online shop and Drop Shipping platform operating tools, etc., only a few tens of dollars a month, only two or three thousand yuan a year. There are no rent, water and electricity, transportation, company registration and other expenses and all the real world worries (such as taxation, business and industry, just imagine it yourself).

(4) Good cash flow

This is not like a real business, where customers can pay on credit and the problems such as debt repayment and demand for payment. Because customers only passYour shopAfter the payment, then you will be like your supplier to pay for the shipment to the customer. In other words, first collect the payment and then ship the goods.

(5) Don’t even need a website

Generally speaking, no matter what form of online business model, you need a website, which is to maximize business opportunities (this is a recommended model, and this is also for long-term profitability based on the website in the future), but it is not absolute. You can open a store on Taobao, Amazon, Ebay, etc. and just list the products.

(6) The product can be put on the shelf immediately -list your product instantly

Because you don’t need inventory yourself, just get some good product pictures, do a few simple tasks such as product description and pricing, and you will be able to open a store and sell profitable immediately.

(7) Wide range of products

There is no need to study the color, size, appearance, etc. of the product in detail, as long as your supplier has what you can sell.

(8) Risk-free new product testing

Perhaps the products added to your online store are new products, but for suppliers, these may be profitable products that are familiar to you. As long as you put them on the shelves, there are almost no testing problems, and there is no so-called risk.

(9) Save time

This is not much to say, it is easy to understand.

Next, let’s take a look

Disadvantages of Drop Shipping-Disadvantages

The downside of Drop Shipping is also quite obvious:

(1) Fierce competition

As mentioned above, because Drop Shipping is very easy to use, anyone can make such an online shop. These people may often use the same supplier and the same product, so the operating profit will not be so good. Although the pricing is determined by you, when customers search for product names on the Internet, there will be a result. The same The lower prices of the products must have the upper hand. A considerable number of merchants on Amazon are Drop Shippers.

(2) Uncontrollable factors

In Drop Shipping, it can be said that you can control nothing except the price (of course, from another perspective, this is also the advantage of Drop Shipping, except for the price, you don't have to control anything).

To put it simply, everything has two sides, and the positive side may become the disadvantage in the other.

For example, as mentioned above, no inventory is required.

This advantage is self-evident.

Then the problems on the other side of it are:

The goods/products are no longer in your hands. You don’t know if they are available now. After receiving the payment from the customer, the supplier may be out of stock and cannot be shipped. What should I do? Can it be ensured that there are no problems in transportation and packaging?

……

(3) Supplier issues

This is a very important link in Drop Shipping. Generally speaking, your online store cannot only sell one or two products. Under the premise of not interfering with each other, in order to maximize the purchasing power of potential customers, of course, the more the better. But the following questions are:

Can one or two suppliers meet your needs?

If the answer is no, then you have to increase suppliers, then you need to diversify a considerable part of your energy to deal with them.

So less, find a similar platform like affiliate marketing alliance CJ, clickbank, Linkshare, and such a reliable and credible platformDrop Shipping platformDealing with, this saves a lot of trouble, and it is also guaranteed.

(4) Freight issues

Maybe you promise free shipping to customers all over the world, but you have to understand that your supplier may not provide you with free shipping services, so you must calculate various shipping issues in advance, otherwise profits will shrink.

(5) Profit issues

As mentioned earlier, there are many problems that will affect your profits.

If you want to solve this problem, you need to find another way.

Although everyone may be selling the same supplier or even the same product, the usual method of competition is to cut prices. Your price is lower, mine is lower, and finally closed.

In fact, it is not necessary.

Business must pursue good profits (of course, under the premise of not breaking the law and ethics), this is justified.

then what should we do?

The product meets the different needs of people. Even the same product will have different people who need it. It should be described and promoted from different angles. To be more professional, this is the choice of niche (niche market). Take a moment to study this problem, this problem is solved, and the profit problem is solved.

Reference reading:

What is a niche (niche) and how to understand

in conclusion

In short, the business of Drop Shipping is not an automatic money-making model, but also requires hard words. Although these platforms provide promotion measures, as a store owner, I suggest that you still have a fundamental understandingintenet marketingOperation andOnline store promotion and SEO work, No, after the system was built, he started to operate on his own: receiving customer orders, suppliers shipping and waiting for money to pay.

However, when it works well, Drop Shipping is still a very good online business model.

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