Is Dropshipping Worth It?

What is Dropshipping?

The process of dropshipping allows retailers to ship their products directly from manufacturers or third-party suppliers to their customers, which takes away the need for stocking inventory. Dropshipping can be a very useful e-commerce business model when used correctly and in the right industry. In industries like fashion, where there are high return rates, dropshipping might not be the best idea. However, in other cases with expensive products that are not considered commodities, the risks of dropshipping might be worth it because you don’t have to pay storage and shipping fees. There are many benefits and risks to dropshipping, and it’s very hard to see if the benefits do outweigh the risks based on historical data. It takes a lot of discernment and market research toward your particular niche or target market for each business to see if this business model is worth it.

Is Dropshipping Illegal?

Dropshipping is not illegal! Many people have the impression that it is at least somewhat sketchy because a lot of dropshippers sell their products on e-commerce sites like AliExpress and Ebay, where many products that are sold for cheap end up taking a really long time to ship out and do not look like the product pictured. Surprisingly, dropshippers on Ebay can profit on average $1000 a month, with their largest fee being from Ebay or Paypal themselves. Although most dropshippers on Ebay aren’t doing this as a full time job, this is a great way that people use to make cash. In fact, dropshipping has become so much more popular these past few years with the rising e-commerce trend and has become more and more relevant and efficient throughout these past few years.

What are the Benefits of Dropshipping?

Dropshipping is a trending business model in 2020. Because there are such low costs, it has become more desirable to dropship products. A major plus to dropshipping is that retailers do not have to pay any storage or shipping fees. Usually, for products that are not mass-produced, retailers might be incurring a loss if storage or shipping fees were incurred. Since there is no inventory, there would also be no reason to hire staff in charge of operations or inventory. All that is needed is a niche market with good marketing strategies that keep customers buying more.

What are the Risks Behind Dropshipping?

The main downside to dropshipping is the fact that e-commerce businesses usually don’t know how many risks are involved. Dropshipping can be hard to handle because it is difficult to regulate what suppliers are sending out are up to business standards. Making sure that the suppliers have a good relationship with the retailer can be hard to form, and making sure that customers are satisfied is even harder to maintain, since retailers would not see the products for themselves.

Another risk involved with dropshipping is that suppliers may not manufacture products to the quality that retailers would like. As a result, packaging might not look as great for generic items, the product itself may have defects and inconsistencies, and the shipping label would also show the address of the supplier itself. Shipping would also take much longer, up to 20–30 days. Because shipping takes so long, returns and refunds would take a long time to process as well. Lastly, it is hard to keep a good customer service base because the retailers are not sending the products out themselves.

As a result of these inconsistencies and the lack of control on shipping services, dropshipping may not be the best idea for some businesses. However, dropshipping is becoming more and more prevalent on e-commerce sites like AliExpress and Ebay, and the dropshipping services may get better in the future as it becomes the new norm.

Is Dropshipping Worth It?

As e-commerce starts to take out more and more brick and mortar stores, there is a chance that dropshipping will become one of the hottest trends for retailers. The cost-efficiencies might outweigh the other risks involved, and suppliers are soon going to catch onto this trend and learn how to supply consistent, quality products to consumers. Although there are many businesses that may not benefit as much from dropshipping, there are still many industries that will utilize it. In fact, dropshipping may become the new norm over the years, and maybe there will be new platforms created that will support dropshipping and make it a more efficient process.