All the advantages we mentioned make dropshipping a really attractive model for anyone getting started with a web store, or for those looking to expand their existing product offerings. But like all approaches, dropshipping has its downsides, too. Generally speaking, convenience and adaptability come at a price. Here are a couple of shortcomings to think about.
- Low margins
Low margins are the most important disadvantage to operating during a highly competitive dropshipping vertical. Because it’s very easy to urge started, and therefore the overhead costs are so minimal, many competing stores will found out the shop and sell items at rock-bottom prices to grow revenue. Since they’ve invested so little in getting the business started, they will afford to work on minuscule margins.
Typically, these sellers will have low-quality websites and poor (if any) customer service, which you’ll use to differentiate your business. But that won’t stop customers from comparing their prices to yours. This increase in fierce competition will quickly hurt the potential profit margins during a niche. Fortunately, you’ll do tons to mitigate this problem by selecting a niche/vertical that’s compatible with drop shipping.
- Inventory issues
If you stock all of your own products, it’s relatively simple to stay track of which items are in and out of stock. But when you’re sourcing from multiple warehouses, which also are fulfilling orders for other merchants, inventory can change from a day today. Fortunately, lately, there are a couple of apps that permit you to sync with suppliers. So drop shippers can “pass along” orders to a supplier with a click or two and will be ready to see in real-time what proportion inventory the supplier has.
Oberlo also lets merchants take automated actions when a supplier’s stock hits zero. for instance, when a product is not any longer available, you’ll automatically unpublish the merchandise, or keep it published but automatically set the number to zero.
- Shipping complexities
If you’re employed with multiple suppliers—as most drop shippers do—the products on your online store are going to be sourced through a variety of various drop shippers. This complicates your shipping costs.
Let’s say a customer places an order for 3 items, all of which are available only from separate suppliers. You’ll incur three separate shipping charges for sending each item to the customer, but it’s probably not knowing pass this charge along to the customer. And even when it does add up to incorporate these charges, automating these calculations are often difficult.
- Supplier errors
Have you ever been blamed for something that wasn’t your fault, but you had to simply accept responsibility for the error anyway?
Even the simplest dropshipping suppliers make mistakes fulfilling orders—mistakes that you’ve got to require responsibility and apologize. And mediocre and low-quality suppliers will cause endless frustration with missing items, botched shipments, and low-quality packing, which may damage your business’s reputation.
- Limited customization and branding
Unlike custom-made products or print on demand, dropshipping doesn’t offer you tons of control over the merchandise itself. Usually, the merchandise drop-shipping is meant and branded by the supplier.
Some suppliers can accommodate your business’s product changes, but even then, the supplier has the foremost control over the merchandise itself. Any changes or additions to the merchandise itself usually require a minimum order quantity to form it viable and affordable for the manufacturer.