Table of Contents
Dropshipping in 2021: Does it actually works?
We are now in the year 2021, technologies have advanced beyond our expectations and we are introduced to many new business models each day. With so many changes in the market and our lifestyle, we often question if the existing industries would survive or work for us in the coming future. One such industry that many have their doubts about is Dropshipping. Let us have a look at its pros and cons and derive our own conclusion.
What is Dropshipping?
Dropshipping is a business structure where many entrepreneurs start as a retailer. The business model is very simple, the retailer sells and markets a particular brand at a higher price, covering profits, once he/she gets an order, they place an order with the seller, who in turn manufactures, packs, and delivers the product to the customer, in the end, rewarding you with the incentives. In this model, you simply act as a middleman for the manufacturer to the customer.
The Advantages of Dropshipping
There are various advantages to begin with when it comes to Dropshipping and the reasons why this model had become so famous a few years back for many individuals. Let us have a look at a few of them.
1. The Investment
The Investment incurred in Dropshipping is far less than E-commerce business. The Retailer has to only invest for the domain, hosting and the marketing to his/her platform. In a nutshell, they only invest for creating and maintaining their desired platform, such as a website and its marketing. As we discussed earlier, you simply act as a middleman or a bridge between the manufacturer and the customer. Hence, except for setting up your platform you don’t have to worry about any investment to manufacture the product, deliver it, or even in case of any defective good, you do not have to worry about replacing the product. Everything is taken care of by the manufacturer or the seller.
2. Brand Value
You do not have to spend money on building a brand value for yourself while dealing in Dropshipping, you are marketing products that already have a brand value created by the seller or the manufacturer. It acts as a good shade to make profits behind a well-known brand or product.
3. Price and Profit
One of the best advantages of a retailer is that you fix the prices by yourself. The manufacturer has its own price fixed but you can keep the price of the product to your choice, according to the profits that you wish to make. In a nutshell, you have a monopoly or the right to decide the price at which you wish to sell to your customer.
4. No delivery or warehouse costs
Dropshipping is a business model that consists of three parties, the retailer, the manufacturer, and the customer. As the manufacturer covers the production, as well as the delivery costs, we do not have to incur any charges. Furthermore, you do not have to keep any storage or inventory as orders are shipped by the manufacturer as per the demands, thus, saving you the delivery and warehousing costs.
Disadvantages of Dropshipping
A coin always has two sides and so does any business. As for Dropshipping, it may have attractive profits but there are also many cons with regard to this business.
1. Cheap products
In most cases or most brands, the products are created at a very cheaper cost, thus making the product less efficient in quality, as per its price. As a retailer, you would want to increase the price, however, most brands offer very cheap products, and hence charging high prices wouldn’t count much, thus making you adjust with fewer profits.
2. The Shipping time-zone
This is one of the major complaints which many retailers have to offer, and that is the shipment delays. As they say, most of the brands have their manufacturers in China, it takes almost more than a week or so to reach the customers. Hence, a delay keeps on affecting your business, the worst-case scenario would be if the product delivered turns out to be defective. This is one of the major drawbacks of Dropshipping.
3. No real ownership
It is simple, you are just a retailer here. You do not own anything in this business model, the products or the brand belongs to the manufacturer, you are just a middleman. Except for your platform or account, it is basically that you own nothing, in reality, it is just similar to Affiliate Marketing.
By looking at both, the pros and cons of the Dropshipping model, one can certainly derive their own conclusion as per their perspective. However, in my opinion, you can not entirely depend or stake your future on Dropshipping as your full-time income, there are too many better business models out there, especially in today’s times. However, you should make your own choices wisely.