What is Dropshipping?

The concept of Dropshipping is nothing new and it´s always existed in the traditional business. A retailer,from the catalogue of one or more wholesalers, sells products without stock, and once the sale is confirmed, the order is placed to the company. Finally, the products are sent to the end customer. 

It´s an interesting formula of creating your online shop without having to to make a great investment; but not all are advantages. It also has its disadvantages that I´ll try to explain below: 

Lower initial investment. The most important advantage of this business model is the cost savings of not having to buy stock. As we´ve explained before, the dealer will only buy the products he´s already sold. On the other hand, if you don´t have stock, you don't have to have one place to store them, another considerable savings to take into account.
 

Starting your Dropshipping business is very easy: you only need a provider that works in a Dropshipping format, and an online shop that´s set up for it. In addition, you won't have to worry about managing the store, preparing and delivering orders, managing refunds in storehouse and controlling stock levels. 

Manage your business wherever you are. This business model allows you to have maximum flexibility. You can manage your business from home, your office or even when you´re travelling. 

Big number of available products. In a few hours, you can move from having an empty shop to show thousands of available products. 

Specifications of products created without effort: when you contact a wholesaler of Dropshipping, you´re normally sent a file with data of all its products, including descriptions, photos in high quality and categories according to his/her opinion. With the appropriate import tools, like those we include in Oleoshop, you can have all the products imported and visible on your online shop in just a few minutes. 

But all isn´t a bed of roses with this ecommerce model. Here are some of the major disadvantages of Dropshipping: 

Minor economic risk. It´s true concerning stock if it´s true. Let´s be clear, you´ll have to invest a sum of money every month to make you known at online level, campaigns, promote your business on Facebook, etc... This investment is equally necessary if want it works. 

Inventory problems: As not being synchronized with the wholesaler in real time, you can have stock-outs and sell products to your customers that you can´t deliver or you can´t deliver on time. 

Integration with various wholesalers. The integration of data with various wholesalers can be complex since they force you to standardize the categories of products in your shop and check the references of the products so that there are no conflicts with other providers. In this sense, it´s much easier if you only work with a wholesaler. 

Errors in delivery. Delivery of wrong products, to a wrong address or miss the deadline. These are the common errors that may happen when we delegate a task to a third party and it doesn´t meet the standards of service and quality that we´d like. 

That is why it ´s very important to have a reliable supplier. 

High competition. In some sectors, there´re currently a lot of shops selling the same and fighting to try to appear at the first result pages of Google. First, it´s important to  investigate the market, study it and analyze if we really have a market niche in the industry. 

Little control. As you don´t make deliveries yourself, you lose control of packaging, you can´t send gift samples, gift coupons or discounts for future purchases. Indeed, these´re the kind of things that give value to the delivery and more likely to gain customers´loyalty.

From here on, it´s up to you to value what you´re going to do, but it´s worth knowing which are the pros and cons. 

See you soon!