Dropshipping may be a great business model for aspiring entrepreneurs to start with because it’s accessible. With drop shipping, you’ll quickly test different business ideas with a limited downside which allows you to learn tons about the way to choose and market in-demand products. Here is a couple of other reasons why dropshipping is such a well-liked model.
1. Less capital is required
Probably the most important advantage to drop shipping is that it’s possible to launch an e-commerce store without having to take a position thousand of dollars in inventory up front. Traditionally, retailers have had to traffic jam huge amounts of capital purchasing inventory.
With the drop-shipping model, you don’t need to purchase a product unless you’ve already made the sale and are paid by the customer. Without significant up-front inventory investments, it’s possible to start outsourcing products and launch a successful dropshipping business with little or no money. and since you’re not committed to selling through any inventory purchased upfront, like during a traditional retail business, there’s less risk involved in starting a dropshipping store.
2. Easy to get started
Running an eCommerce business is far easier once you don’t need to affect physical products. With drop shipping, you don’t need to worry about:
- Managing or paying for a warehouse
- Packing and shipping your orders
- Tracking inventory for accounting reasons
- Handling returns and inbound shipments
- Continually ordering products and managing stock level
3. Low overhead
Because you don’t need to affect purchasing inventory or managing a warehouse, your overhead expenses are quite low. In fact, many successful dropshipping stores are run as home-based businesses, requiring little quite a laptop and a couple of recurring expenses to work. As you grow, these costs will likely increase but will still be low compared to those of traditional brick-and-mortar businesses.
4. Flexible location
A drop shipping business is often run from almost anywhere with an online connection. As long as you’ll communicate with suppliers and customers easily, you’ll run and manage your business.
5. Wide selection of products to sell
Since you don’t need to pre-purchase the things you sell, you’ll offer an array of trending products to your potential customers. If suppliers stock an item, you’ll list it as purchasable on your online store at no additional cost.
6. Easier to test
Dropshipping may be a useful fulfillment method for both launching a replacement store and for business owners looking to check the appetite customers have for extra product categories, e.g., accessories or wholly new product lines. the most advantage of dropshipping is, again, the power to list and potentially sell products before committing to purchasing an outsized amount of inventory.
7. Easier to scale
With a standard retail business, if you receive 3 times the amount of orders, you’ll usually get to do 3 times the maximum amount of work. By leveraging dropshipping suppliers, most of the work to process additional orders are going to be borne by the suppliers, allowing you to expand with fewer growing pains and less incremental work.
Sales growth will always bring additional work—especially associated with customer support—but businesses that utilize dropshipping scale particularly well relative to traditional eCommerce businesses.