Dropshipping has been adopted by many online stores due to its profitable nature. However, there is always uncertainty in the profitability of the business as some end up being short-lived. Might that be the case of dropshipping? Technology that was used ten years ago has been outdated with better ways of serving the customers being adopted. As new forms of the business evolve, older forms get outdated.
The current trend of drop shipping
Many people have the assumption that dropshipping is dying. However, according to Google trends, many people are still searching for terms related to it. This is evidence that people are still willing to use the service to sell products to their customers.
However, there is a need to have a trustworthy and credible manufacturer to ensure they send the appropriate item to the customer. This can affect the business if the third-party takes advantage.
Why sellers still prefer to engage in dropshipping?
- Less man-power
Many sellers still prefer the method, as they act as an intermediary and don’t stock the products physically. However, they just advertise the product, and whenever a buyer orders it, purchases from the third party and sends directly to the buyer. Thus, the seller doesn’t handle the product and this saves him/her from external expenses.
- Minimal capital investment
A seller can invest in an ecommerce store without having to use too much capital. This is because a seller doesn’t necessarily have to purchase the product and stock in the warehouse. Simply, when a customer purchases a product with the set price on the ecommerce store, the seller just needs to buy from the third party and input the customer’s address to be delivered directly. The main duty is to outsource and ensure the product reaches the customer on time.
- Easy to start and scale
With a dropshipping business, you don’t have to stock products, but just have a credible third party that will provide the necessary services. You won’t need a warehouse, packaging services, or handling returns. This makes overhead expenses lower. You can run your store in the comfort of your home.
- Few requirements
For dropshipping, you just need a stable internet connection, proper communication with suppliers and customers. You just need to work out a good price for your products to ensure you still earn an amount after selling to boost your business operations. Besides, you can sell a wide selection of products.
Why dropshipping is slowly dying?
- Many online stores procuring drop shipping
The various advantages are quite tempting and anyone would easily want to indulge in dropshipping. This has created a competitive market, with each store trying to sell its products with the lowest price as possible. For common products, you can easily access from different suppliers and sellers tend to bid for the lowest price.
Thus, many customers will easily be attracted to the other seller. As seller A, if you try to compromise your prices to be on the same level as seller B, you might end up having a loss. This can easily make your business to fall, due to not being able to cater to the operation costs.
- Problems in keeping track of stock
You might be too caught up to realize that a certain product is out of stock. Thus, when a customer orders a product, and you fail to get it from your reliable seller. You might have to opt to seek elsewhere without fully knowing the credibility of the next seller. The downside of this is that it can cause a delay in sending the product to the buyer.
- Shipping problems of different products
At times, a customer may want to buy five different types of products. Due to the diversity of your third party suppliers, you will have to incur five shipping costs for all the products. You will have to include the shipping costs to the product cost, but you won’t manage to account for all of it. This can lead to a loss on your side.
- Taking responsibility for supplier errors
Many people are also backing out of dropshipping, as they have to take up the responsibility of supplier’s errors. In the case that a product sent didn’t meet the satisfaction of the customer, it can be a bit troublesome to solve it. This can even lead to a refund to ensure you satisfy your customer’s wants. It is also hard to brand the products due to the diversity of the suppliers.
Conclusion
There is no certainty of the sustainability of dropshipping in the market. However, it is a comfortable business anyone can engage in with proper initial investment in the online store. The fact that people are still searching for drop-shipping terms means that more people are still interested in venturing in it as passive income or on a full-term employment basis. It might be slowly dying due to the various disadvantages but is still sustainable
