Dropshipping Pros and Cons
Style Factory
E-commerce, web design and digital marketing advice and resources for growing businesses.
In this quick guide to the pros and cons of dropshipping, we’re going to lay out all the key reasons you might consider it as a business model — as well as the reasons it might not be the right fit.
Let’s kick things off with a quick overview of how dropshipping actually works.
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Dropshipping is a way of selling online in which you don’t manufacture, purchase, store or deliver any products. Instead, you take orders for products via your online store, and pass them onto a supplier. The supplier then sends the goods to the customer — and charges you a fee for doing so.
But should you embrace dropshipping as a business model?
Well, let’s go through the advantages and disadvantages of dropshipping and find out.?
First up, the advantages.
Please note: we independently review all products in our comparisons. But when you buy through our links, we may earn a commission (at no extra cost to you). View editorial policy here.
The advantages of dropshipping
1. Dropshipping gives you a low-cost, low-risk way to start a business
The main advantage of the dropshipping model is that it lets you start a business very cheaply.
The only upfront cost is the monthly fee for an online store builder, like Wix or Shopify. And platforms like these are generally fairly affordable, at least when you’re starting out.
And, because you don’t have to pay for any products until one of the visitors to your online store actually buys one, there’s no manufacturing or inventory purchasing costs to worry about either.
2. It lets you sell a wide range of products
With dropshipping, you can sell pretty much anything you like. A huge number of dropshipping suppliers is available to supply you with a vast range of products — giving you a lot of flexibility regarding niche selection.
Working with a dropshipping supplier is usually a simple case of connecting their dropshipping app to your ecommerce store.
Popular apps for selling household goods include DSers and Spocket; alternatively, you can use print-on-demand services like Printful or Printify to sell your own, customized printed products.
You can also access the Printful and Printify print on demand platforms for free at the links below:
3. It lets you run a business from anywhere
So long as you have an Internet connection and a computer, you can essentially run a dropshipping business from anywhere.
You don’t need to worry about finding a physical location for your business to operate from — something that can take a lot of time and cost a lot of money.
4. It’s not labor intensive
Unlike a business model that involves manufacturing your own products — or stocking someone else’s — dropshipping is not labor intensive.
You generally won’t need to worry about manufacturing, shipping products or inventory management. You will have to field enquiries from customers, and occasionally organize product returns — but overall, if you set things up the right way, the workload involved with dropshipping is usually very manageable.
5. It’s scalable
A key advantage of dropshipping is its scalability.
With other business models, getting growth usually entails spending a lot of money and managing more and more inventory, staff and logistics.
But dropshipping allows you to expand without these financial or operational headaches: you’re dealing with a digital infrastructure that can support rapid expansion without significant investment.
6. It’s great for running experiments with
Because the dropshipping business model is relatively risk-free, it gives you a lot of freedom to try things out.
Experimenting with your dropshipping store’s branding, product ranges and approach to online advertising doesn’t really involve much (if any) expenditure.
And, because dropshipping is based around digital technology, you can get a lot of valuable and easy-to-access data from these experiments. This can be used to develop your business with.
Ok, so that all sounded great, didn’t it? But there are some significant downsides to be aware of when it comes to dropshipping.
I’ll go through these in just a moment, but before I do, I’d just like to mention that you'll find some links to additional tips on dropshipping at the bottom of this post.
You’ll also find links there to trials of ecommerce platforms and dropshipping apps, including a special 3-month Shopify trial.
OK, now let’s move on to the disadvantages of dropshipping as a business model.
Disadvantages of dropshipping
1. Dropshipping profit margins can be low
Because dropshipping is a low-cost, low-risk business model, the barriers to entry are usually very low.
So, you’ll inevitably find a lot of other merchants entering the dropshipping space, selling the exact same products as you, and competing heavily on price.
And all this puts pressure on you to sell products more cheaply than you’d like to —?and eats into your margins.
2. It’s hard to ensure that your inventory is ethically produced
The advantage of making your own products, or sourcing them locally, is that you can gain a really clear understanding of who made your inventory and how it was produced.
With dropshipping however, you’re often in the dark about the working conditions in which your products were made. Many dropshipping companies are based in locations where forced labor is not uncommon.
The takeaway here is that if you care about ethics, do some due diligence before committing to a particular supplier.
3. You don’t get much control over branding
With a lot of dropshipped products, you have little control over the appearance of your products — you are generally dealing with ‘off the shelf’ items that lots of other merchants are already selling online.
Accordingly, if having a product range featuring your own brand is important to you, then dropshipping is not necessarily for you.
4. Suppliers can be unreliable
With dropshipping, you’re often relying on suppliers that you don’t know personally, and that you can’t adequately vet.
This can lead to issues with product quality; bad communication; products going missing; and low-quality packaging being used.
And all this can result in unhappy customers.
5. Providing customer support can be hard
When a dropshipping order goes wrong, good customer service can be tricky to provide.
This is because when a problem crops up, you are often relying on a third-party supplier — who you don’t know and who may be located on the other side of the planet — to solve it.
This can lead to long waits for a resolution to problems?— and your customers may be puzzled as to why you, the online store owner, can’t just resolve issues quickly yourself.
6. Shipping fees can eat into your profit margins
Depending on where your customers and suppliers are based, shipping your products may prove expensive.
A lot of dropshipping suppliers are located in China, so if the bulk of your customers are based in the US, they — or you, if you’re offering free shipping — will have to pay a high fee to get their products delivered to them.
7. There are environmental issues to consider
Dropshipping isn’t particularly environmentally friendly.
If your suppliers are based in China (as many big dropshipping suppliers are) and your customers are based in the US or Europe, the delivery process is going to generate a larger carbon footprint than you might like.
So, from an environmental and sustainability point of view, dropshipping isn’t always great.
Wrapping up
And that’s that — our take on all the dropshipping pros and cons!
For a deeper dive into the advantages and disadvantages of dropshipping, do check out our full 'Dropshipping Pros and Cons' post on the Style Factory website.
And as promised, you'll find links to dropshipping apps, print on demand suppliers and a special 3-month trial of the Shopify ecommerce platform below:
Before you go, I’d also like to invite you to join our mailing list — when you do you’ll get access to our free ecommerce kit, which contains a host of useful free resources on how to start an online business along with discounted access to key ecommerce tools.
And finally, if you have any questions, do drop them in the comments. We read them all and will do our best to help.
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This article was written by Chris Singleton. Additional research by Matt Walsh.