The statistics say that 50 percent of new businesses fail within the first five years. However, don’t be discouraged because when you start a dropshipping business you have a good chance of succeeding if you know exactly what to do.
Ready to dive in? Although it is one of the easiest businesses to get into there are pros and cons of drop shipping. That means you have to plan carefully how you will go about getting started to ensure that your business is a success.
If you are ready to enter this brave new world then you will need some tips to help you begin. Here are the essentials you will need to get started on the road to dropshipping success.
1. Low Startup Cost
Perhaps the greatest asset when you want to start a dropshipping business is the low startup cost. This is because you neither have to keep your own stock or buy it upfront. Another great thing is that you don’t even have to ship the products or deal with returns.
You simply order it from your supplier when someone makes a purchase. Often even the purchase and manufacturer notification can be set up automatically. This gives you the opportunity to have a totally hands-off approach to your business.
However, it is not exactly a set it and forget it situation because you still have to monitor everything but it is as close to it as you will get to it.
2. Effective Managing of Inventory
It has already been said that not having to make or store inventory is one of the best things about dropshipping. However, one of the major pros of this type of business is that you will never have excess inventory.
Ordering too little or too much of a product is something that can break any startup. The beauty of having a dropshipping business is that you do not have to worry about any of that.
This factor alone will make it less likely that your business will fail.
3. Test What Works and What Doesn’t
When you are just starting out you will want to test out new products to see which ones sell well and which ones don’t.
When you have a dropshipping business you can test at less cost to you. If something doesn’t sell you have lost nothing you can withdraw it without suffering inventory or monetary loss. This gives you greater freedom to test a lot of products until you find the perfect fit for your business.
4. Less Control Over Inventory
There are many benefits to having a dropshipping business but there are also downsides. One of the most often occurring deficiencies of this system is that you have less control over everything.
What this means is that if mistakes happen along the way you will be blamed for it and your customer may cease doing business with you. You also have little control over whether the order is late or not.
If an order is late there is nothing you can do about it because you do not stock the item. If it is defective you will have to rely on your supplier to refund or replace it. The best way to avoid this is to work with reputable suppliers like Fulfilltopia, who do business in a professional way.
With that being said, even under ordinary circumstances, it is difficult to get things perfect all the time. The trick is to reduce these occurrences, you can also offer customers a discount or another complimentary product if their product is late or if it is somehow defective.
It may cost you but it will save your reputation which is far more valuable if you are in it for the long haul.
5. Stocks Run Out
When you have a dropshipping business stock may run out on your supplier. When this happens you may have a popular product that earns a lot of money but you either have to label it as out of stock or take it from your storefront temporarily.
This can happen frequently during the holiday season. This is actually the worst time for this to take place since that is the best sales season of the year.
6. Things Can Get Expensive Fast
One of the things you should be aware of is that things can get expensive very quickly when you are dropshipping. This is because your supplier needs to take a cut of the profits and you will also need to make a profit.
This may mean that you will have to pass on the expense to your customers which can make them look for cheaper options. This is why it is always best to sell a unique product to your customers.
This can usually be done by adding a unique design to your products, this will make your product one of a kind, in this way you can justify higher prices.
However, the best thing you can do to offset prices is to get volume sales. This means that you will need to market your business well to drive traffic to it. Once you are able to have a high level of traffic then you do not need to markup your prices extra high in order to make a sizeable profit.
A Final Look at the Pros and Cons of Drop shipping
Dropshipping has become one of the fastest-growing business models around, this is because it is easy to get started. However, you need to examine the pros and cons of drop shipping in order to reap the benefits.
Once you know what to expect and prepare for it you should be able to get over any hurdles in the way of your success. Remember that even when things go wrong it happens to every business, it is how you deal with it that matters.
Finally, the most important thing to remember is that you should always align yourself with suppliers that are professional. If they are not, then it can make your business look bad and this will make marketing harder for you.
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