Dropshipping is an increasingly popular trend with people who want to experience entrepreneurship or just make some extra money on the side. The increased security and reliability of e-commerce and e-purchasing options also make dropshipping a viable business model. A lot of people are interested in this business model because it only requires internet know-how and relatively low costs in digital marketing.
On the other hand, you could end up investing a lot of time and a sizable amount of money without seeing any quick returns. It is prudent to look into what dropshipping is and its advantages and disadvantages before making the leap into trying it out yourself.
Advantage: Security and Privacy
Dropshipping does not require you to have storage space or an office. You can work out of your home and simply get a PO box for the official registered address of your website or business.
This will make you seem more professional to your clients, make your mail more secure, and ensure that your personal security at home is not compromised.
You can also keep your billing and business correspondence separate from your mail at home, which will ensure that nothing important gets lost. In the long term, your personal address may change but your PO box can remain the same. This means that even if you move, you do not have to worry about losing business.
Disadvantage: Time and Commitment
You may intend your dropshipping business to be something you do on the side, but it has the potential to take up a lot of your time. As the sole owner and operator of the business, you are also the only customer service staff.
Your customers may want information about the product, delivery times, and the progress of their delivery. They will even have queries after delivery. You are their sole source of information in this matter and you will need to connect with them regularly. If you do not maintain regular correspondence with your customers, you risk losing them to another drop shipper.
Once you gain a customer base and streamline your customer service duties, it can get easier. But that initial star-up phase will require a great deal of your time. If you are not able to make this commitment then your business may flounder.
Advantage: Niche Items
Your success depends on people actively purchasing the items you market to them. If you choose a good niche product to sell, then your customers will find you instead of you having to find them. This will keep your marketing costs low and increase your profit margin.
If you have a product in mind, then use online resources such as Google and Trends to find out if people are actively searching for that item. If it is not a popular search item, then you know before you have made an investment in it, that it will not sell well.
If the item has a lot of hits and is searched regularly, then you can be certain that there is a customer base waiting for you to reach them. Make sure to find the right platform to sell your product from and you could see a lot of profit within a short amount of time.
Disadvantage: Resource Management and Risk
Not needing to have an office space and it’s accompanying costs can be a big money saver, but dropshipping will still require some financial investment. Initially, you will be spending much more than you will earn. This expenditure may go on for a significant amount of time.
If you do not have the financial security to bear a loss for a while, then it can be both disheartening and very stressful. If your product is good and popular, then you may be marketing wrong or there may be a lot of similar products available.
Persistence is key to finding success in this type of business. It will test your patience and tax your resources. If you are not in a position to absorb the results of your business potentially failing, then dropshipping is not for you.
It can feel overwhelming and there is a lot you need to learn and be aware of before taking the leap. Alternatively, any business venture comes with risk. If you feel the advantages outweigh the disadvantages, then dropshipping may be a side business that will bring you great benefits.
If the disadvantages have turned you off, then keep searching. Modern life comes with so many opportunities for innovation and entrepreneurship. There will be something out there that suits you and your needs.