This is a guest article written by bidorbuy.
Dropshipping is often seen as the easy way to get into the eCommerce industry. However, as with most formulas that sound too good to be true, dropshipping has many downfalls. It is important to consider all the alternatives to dropshipping.
The most common problems encountered by dropshippers is selling popular items that are out of stock or – even worse – discontinued. The biggest problems arise because of the simple fact that you are placing your customer service in the hands of your supplier.
- occasionally the product information is wrong
- wrong item is sent to the customer
- the product is of an inferior quality
- or it has been damaged due to bad packaging
Purchasing your goods on consignment eliminates these problems. If you have the storage facilities it is best to keep your products in stock. This way you are fully responsible for the storing, tracking, packaging and shipping of the inventory without the risks associated with legally owning the stock. Like dropshipping, you don’t have to pay upfront for any of the products you want to sell. This removes the possibility of having your money tied up in dormant stock. You can save on inventory whilst maintaining a great supplier-customer relationship and keep a wonderful variety and huge selection of products to suit every customer.
The reason many sellers opt to start a dropshipping business is because it is relatively easy to get into. You need less capital to start your business and you don’t have to bear any overhead charges. With higher startup costs, the barriers to entry are higher hence there is less competition.
Dropshipping often means that many other people are probably selling the same products in the same way. As there is more competition, it is harder to stand out as a new business. The best way to ensure that you have little competition is to import your own line of products and privately label them. Not only can you import higher quality products but you can exploit international trade technology. Whilst margins are very low when dropshipping, because items are purchased one at a time, importing allows you to make use of bulk purchase discounts and still dictate prices.
Sell digital goods
If you are attracted to the notion of dropshipping because you want to keep your business location flexible and you don’t want to control inventory, digital sales is your best option. Digital goods are products that are stored, delivered and used in an electronic format such as e-books, music, software, games and vouchers & coupons. Like dropshipping, when selling digital goods you don’t have to store, track, pack or ship inventory. The key to this method is to work closely with partners to produce unique offerings that larger retailers cannot match. Stock is unlimited and costs remain low even while reaching international markets.
Make your own
Whether it is clothing, jewellery or natural beauty products, making products yourself allows for precise control over quality and the brand. This is usually one of your lowest risk options and margin potential is usually highest. While not all products can be hand-made, it is important to consider using a manufacturer. Either you can create your own unique product or you can reproduce a product at a cheaper cost. In this case, you will have complete control of the entire experience a potential customer may have. This allows you to experiment and continually develop your product. The challenge is to produce a high quality product while keeping your costs low.
While the work associated with keeping stock can be time consuming and costly, it is often the most important part of running a successful business. To avoid the headaches that dropshippers experience, it is in your best interest to consider making use of stock on consignment, importing, selling digital goods or creating your own products. As long as you have the products in stock, half your problems should disappear.