Six Benefits of the Dropshipping Model for eCommerce Stores
Dropshipping is a method of order fulfilment in which a merchant does not hold stock of the items it sells. Rather, the seller buys stock as required from a manufacturer or wholesaler in order to fulfil orders that come in.
Considering getting a webstore and starting a dropshipping business in 2022? Here are some of the benefits to get you inspired.
Fancy working from a bungalow in Bali? Well, as the proprietor of a dropshipping business, you can—most of your work involves managing your ecommerce shop and communicating with your customers and suppliers to ensure that orders are fulfilled on schedule. So as long as your beach hut has a solid internet connection, you can keep your webstore running smoothly while you enjoy a smoothie.
You don’t have to rob a bank to get started
Arguably the top benefit of dropshipping is the ability to get your venture up and running without having to spend huge sums of money on stock that you may or may not shift. Until your customers have paid, you don’t have to shell out for the inventory. Investing this significant saving in a professionally designed web store will ensure that your customers have a great experience with your brand.
Freedom to test business ideas
The fact that dropshippers don’t have to hold stock drastically reduces the upfront investment required to start an ecommerce business. This accessible model allows sellers to try out business ideas with less risk—if you don’t hit on the perfect in-demand product and start with an optimised ecommerce website on your first attempt, you can start over and refine your approach. And the freedom to test doesn’t stop once you’re happy with your core offering: you can test new product lines or launch sister companies to your heart’s content.
An ecommerce business is a highly complex machine with lots of moving parts related to stock management and logistics. Dropshipping removes much of this complexity because you don’t have to hold, manage, pack or ship your goods. Your job is managing your web shop and providing excellent customer service while your suppliers do the rest.
Here are a few headaches you won’t have as a dropshipper:
- Renting, staffing and managing a warehouse
- Packing and shipping
- Managing stock levels for reorder and accounting
Foregoing the warehouse reduces your monthly overheads significantly. It’s even likely that you will be able to launch your dropshipping startup from your house or garage, putting you in esteemed company—Amazon famously started in Bezos’ garage! Assuming you already own a laptop, you can get started with minimal running costs.If you aren’t able to make the big upfront investment to have an ecommerce agency design your webstore, you may be able to revisit this option later on when you can reinvest profits from your business. You could also consider launching on eBay or Amazon and get your own ecommerce store a little later in your journey.
Curate your ultimate catalogue
Because dropshipping removes the need to pre-purchase stock, your web store or marketplace shopfront can display any products your suppliers have available. So feel free to pick and choose products to suit your audience and brand, or jump on a new trend. You’ll soon discover what products your buyers like the most and be able to refine your online catalogue without losing the ability to change it up and keep things interesting.
Fewer growing pains
The traditional retail model can be challenging to scale because stock management, shipping and handling is labour intensive and additional orders will place strain on your team. Hiring extra staff can be a tricky process and the growth road is seldom smooth. As a dropshipper, you will still need to work harder when you start to get more orders but this additional work mainly comprises extra administrative tasks managing your web store and customer service. If you’re efficient, your business could grow significantly before you take the plunge and invest in growing your team.
Ready to start coining it as a dropshipper? Hold your horses. In our next article we’ll be sharing some of the challenges of this popular ecommerce model. By the end of this series, you should have a clear understanding of both sides of the coin so you can make an informed decision.