Advantages And Pitfalls Of Dropshipping

There is an incredible opportunity, out there for you to start a profitable eBay business. Using dropshippers to sell products on eBay and the internet is really beneficial. The supply chain management works this way; you market and sell a product online at a price you choose and wait for the customer to purchase it and as soon your customer purchases the item, and you receive payment for it, you place an order for the product you just sold with a "drop-shipper." The drop shipper then charges you a wholesale price and ships the product directly to your customer thus pocketing profit on the difference between the wholesale and retail price. The best part of dropshipping is that you have no inventory to hold or finance, and no shipping hassles.

Thus you can see that this business hypothesis can be an entrepreneur's dream, but only possible after doing the right homework. In short, work smarter by evaluating the value of your time vs. the value of information. To make a few extra quid in your spare time you can make dropshipping your one option. But before that it is important to know the advantages and pitfalls of dropshipping.

Advantages of dropshipping are that there no storage issues at the end of the seller because the dropshipper holds all the stock and can sell any of these items by any method they wish. No packaging costs are involved at the end of the seller and the dropshipper acts on the order only when the item has been sold and the payment has been received. Since the dropshipper delivers the orders out directly to the customer therefore delivery costs and efforts are unassociated with the seller. The dropshipper is free of deceit to the customer because as far the customer is concerned, their purchase has come directly from the seller. Therefore your work as a retailer is only to concentrate on sales and marketing and making profits.

As far as dropshipping pitfalls are concerned the whole supply chain system depends on the seller's reputation that will take the hit. And the seller has to rely on the goodwill and professionalism of the dropshipper/wholesaler. It should be remembered that the end buyer cares nothing except receiving the product that they paid for on time. Another pitfall is that working with smaller dropshipping companies will reduce the profit margin and one might end up paying much more per unit of product than by contacting manufacturers directly. Therefore for a fast selling product it could be worthy buying small quantities directly from the manufacturers. Dropshipping with both its advantages and disadvantages as other business strategy can be highly rewarding if you just maintain caution.