If you are interested in e-commerce or want to start your online store, you should have heard about "dropshipping". By and large, dropshipping is an economic model in which the supplier deals with delivery to the end customer. This method has several advantages for e-merchants, which no longer needs to build up a stock and manage deliveries. But also some disadvantages not to neglect. What exactly is the dropshipping? What are its main advantages? Its disadvantages? Is dropshipping right for you? The answer to your questions in this article.
What is dropshipping?
Wikipedia gives a picked and synthetic definition of dropshipping. The dropshipping , which could be translated into French by "direct delivery") is a "tripartite system where the customer (the consumer) places an order on the distributor's website (the merchant), which transfers it to the supplier ( the wholesaler), which ensures the delivery and manages the stocks ". It is the supplier who sends the packages directly to the end customer.
In the context of e-commerce, it is a system where the e-merchant delegates the processing of orders made on its site to its suppliers. If you do dropshipping, you have no stock to manage and do not have to worry about delivery. You simply transfer the orders on your site to a "dropshipper" who takes care of the stock and the logistics.
Dropshipping has several big advantages, especially if you're new to e-commerce. But from a certain stage of development, this mode of operation (which also defines a business model) can be a factor of risks and complications. Let's take a quick look at the advantages and disadvantages to consider when thinking about doing dropshipping.
The advantages of dropshipping
The dropshipping is an economical solution to sell products online. It allows to launch an e-commerce activity without having to worry about managing a stock. The dropshipping also makes it possible to test a market without taking the risk of investing in a stock. Several strategies of dropshipping are possible according to the objectives and the specificities of your activity.
1 Reduce overheads and investments
Going into e-commerce always involves a financial risk. You must buy packaging, build a stock, buy equipment, buy or rent a space (a warehouse ...). It is your sales that will make these initial investments profitable. But what happens if sales on your site do not reach the level expected and anticipated in your e-commerce business plan? Your stock is stagnating and you are no longer able to cope with the payment of your expenses. If you start e-commerce, dropshipping can reduce financial risks.
2 Save time and quickly grow your business
Processing orders and managing delivery takes a lot of time. If your business is very underdeveloped and you only receive two or three orders a day, it is manageable. But as soon as you start to develop, order processing quickly becomes a very time-consuming activity.
If your e-commerce business is growing at a fast pace and you're struggling to cope with demand, dropshipping can be an interesting answer. It allows you to grow without stress, without having to worry about delivering parcels on time. Dropshipping allows you to spend more time developing your business, strategic thinking, marketing
3 Validate new products
Do not know if your products will sell? Want to expand your catalog and explore a new market? Dropshipping makes it possible to test new products without taking risks. Once again, you do not need to build up a stock, hoping it will run out. If you do not sell any products, you lose nothing. Dropshipping is used to test and validate new products.