Someone suggested that you start a dropshipping business in order to make money online, but you decided to look for the pros and cons of dropshipping before you start?
That’s a great step as it means that you understand that every online business model has its own pros and cons, and each one suits certain people depending on their character, circumstances, goals, skills and knowledge.
And that’s why I wrote this article where I show you the advantages and disadvantages of the dropshipping business model so that you decide for yourself.
Without further ado, let’s begin with the benefits of doing dropshipping first.
Pros of Dropshipping
1 – Variety of Products & Niches
When doing dropshipping, one of the main advantages over other business models is that because you don’t need to create a product or hold inventory, you can tackle almost any niche or industry, and you can find thousands of products in every niche that you can sell through dropshipping.
This is a bit hard with other models like FBA or even selling locally for example where you need to buy inventory in bulk and pay in advance, and if the product is expensive, then you cannot buy it and sell it.
2 – Supplier Selection
Because you can outsource the products you sell through dropshipping from almost any country, especially China and United States, this means that you can find a lot of suppliers who sell variety of products in different industries.
This helps mitigate issues like product unavailability, or sometimes if one supplier started selling you low quality products, you can research and find a better supplier for the same product.
3 – You Control Margins
One of the most important pros of dropshipping is that you can find good products for low price and sell them at a high markup.
This is done best when you find a useful or very cool product that people still don’t know that exists, and it is not available everywhere on Amazon, eBay, Walmart, …etc.
Especially if you look on AliExpress, the retail online marketplace from China, where there are new products added every single day.
Or, you can sell print on demand products like leggings, t-shirts, mugs, …etc., with unique designs that you do, or you hire someone to do for you, and then you sell at the price you want because no other seller has the same designs.
4 – Fast Scalability
Because you don’t need to deal with the manufacturing, material, fulfillment, shipping, and other aspects in detail, you can save a lot of time that you can further invest in researching new products to sell, new audiences to market for, and new ways to reach out to your existing customers and sell them again.
This means that you can upscale your dropshipping faster than other models, especially that many of the tasks that you need to do can actually be done through virtual assistants that you can hire.
5 – Can Negotiate Prices if You Make Lots of Sales
Because you can scale your dropshipping business fast, you can sometimes negotiate the price with your supplier if you are getting lots of sales on certain products.
With this, you can increase your profit margin, and you can afford to do more marketing in order to get more sales and increase your customer base.
6 – Different Ways of Promotions
Because you can control your margins, you can choose almost any method of advertising in order to promote your dropshipping products.
This could be free organic advertising methods such as seo, social media profiles and pages, YouTube, …etc.
And it could be the paid traffic methods such as Google and Bing ads, Facebook ads, Twitter ads, Quora or Reddit ads, …etc., like Franklin teaches in his course.
And you can even do dropshipping on Amazon, Etsy, or eBay instead of starting your own store, but honestly, I recommend that you create your own dropshipping store on your domain name in order to be able to increase your sales through upsells and cross-sells, and in order to increase the customer LVT through email marketing and remarketing later.
This is a big advantage of dropshipping compared to other models, such as affiliate marketing for example where you are limited when you promote physical products that don’t pay a big commission that would cover for the ads.
7 – Can Be Combined with Other Models
If you have an online business where you sell your own products, and you think that a certain product might be good for your customers, but you can’t make it or buy it in bulk, then you can dropship it, and keep the margin.
Or, if you have an affiliate business, and you notice that people are purchasing a certain product a lot through your link, and you get paid 10% as a commission for example, assuming that the product price is $20, that’s only two dollars.
While if you outsource it from a dropshipping supplier for $7 for example, you can now sell it by yourself for $20, and keep the profits after the supplier’s price and the processing fees.
This way, even if dropshipping is not your main stream of income, it can be a supplementary source that increases your revenue and profit.
8 – Fast to Start
Because you don’t need to buy products in bulk, you can start a dropshipping business faster than other businesses, and you can research and choose your dropshipping niche and start looking for products to sell, run your campaigns, and probably make your first sale within one or few days of starting.
However, this doesn’t mean that you will be profitable on day one.
You need to test and optimize your campaigns before scaling them in order to make real money with dropshipping, and you need to respond to your customers questions and inquiries in order to keep them happy.
This is a long term business.
9 – Low Startup Cost & Risk
Another one of the dropshipping pros is that you can start a dropshipping store for a few hundred dollars since you don’t have to buy any products in advanced.
You only pay to the supplier after you receive the money from your buyers.
However, you still need to pay for the ads in case you want to do paid advertising, and depending on the gateway you are using, they might hold your money for a few days or weeks before they send it to you, which means that you need to have money in order to fulfill the orders before you receive your money from the payment processor.
Also, you need to pay for the platform you will use for your online dropshipping store, but that’s a minor thing thanks to the recommended platform in the following point.
But in general, you can start your dropshipping business for around $1,000.
This makes dropshipping a low-risk business to start with.
10 – Easy to Start & Manage with Shopify & Oberlo
Although the dropshipping model is already a beginner-friendly model, but it can get even easier with the online tools and platforms available.
One of the best and most popular platforms to start a dropshipping store is Shopify, which allows you to start a dropshipping store in literally less than an hour!
Shopify is very easy to learn and super-intuitive to use, which makes it good for beginners.
Add to that, Shopify comes with an app that is called Oberlo, which makes doing dropshipping on your store very easy as it helps you search and fetch products from AliExpress and add them to your store in few clicks.
But you still need to optimize the product pages and write a good product description that sells.
And it also helps you fulfill the orders after you receive them in few clicks and it will automatically send the customer details and address to the supplier in order to ship the order on your behalf.
And there are many other apps that allow you to dropship different products on your Shopify store.
11 – Lots of Resources to Learn
Because of the rise of Shopify and its ease of use, especially for dropshipping, lots of training material has been published online in the past few years teaching beginners how to start a dropshipping business with Shopify.
Some are free, and some are paid.
And one of the best dropshipping with Shopify paid, yet affordable training courses is called Ecom Elites by Franklin Hatchett.
But there are also good free courses, especially the ones published by Shopify Compass (previously known as Shopify Academy), which were created by some of the top dropshippers in the world.
So, the above eleven dropshipping advantages are enough to let you know that dropshipping is a viable model to start with.
However, there are some disadvantages to the dropshipping model that you need to be aware of before you start, based on your character, skills, circumstances, and more.
Cons of Dropshipping
1 – Less Control Over Quality or Availability
Because you don’t manufacture the products you sell, you don’t have much control over the quality of the products delivered.
And sometimes the products goes out of stock for the supplier you are outsourcing from.
However, there are solutions to both issues.
For the quality, you can order test products before you start promoting a certain product in order to ensure that you won’t get lots of refunds from unsatisfied customers.
Or, you can check out the reviews on the product’s listing on AliExpress, but make sure that there are many reviews from many different people and not only from one person.
And for the availability, you may contact the supplier before you scale your campaigns in order to see how big you can go with him, or you can look for more than one supplier with good reviews before you start dropshipping from one of them.
2 – Long Shipping Times
If you want to make good profit, then you need to use inexpensive dropshipping methods.
But these usually take longer time than what people are used it when they purchase from Amazon for example.
This will lead to many email messages asking about the ordered items and when will they be delivered, which is one of the cons of dropshipping businesses.
The solution to this is to mention on the product page and on the shipping policy page the range of delivery time before people purchase.
Also, try to look for suppliers that have warehouses at the same country you are selling to.
Although that might put some people off and prevent them from buying, but believe me, it is better than getting daily inquiries from customers and refund requests before they didn’t receive the items on the same day they made the order.
3 – Can’t Negotiate Prices at The Beginning
If you don’t make lots of sales for a certain item, it is a bit difficult to get a special discount from the supplier.
But anyway, the prices of the dropshipped items are already low and you should not worry about this at the beginning.
Focus on building a long term relationship with your customers and suppliers, and you can get better prices later on as your business grows.
4 – Need to Deal with Customer Support
Different from affiliate marketing for example where you don’t do anything related to customer support, with dropshipping, you need to do the customer support by yourself.
For example, if someone asks about the shipping status, you need to send them the tracking number.
If they ask about how to use the product, you need to answer them.
If they are unsatisfied of the quality, or received a broken item, you need to refund them, instead of letting them do a charge back on their credit card, which affects your situation with the payment gateway negatively.
I personally don’t like to do customer support by myself, but there are solutions to this, such as:
- Making test orders to check the product quality before you sell it.
- Selecting good suppliers with lots of positive reviews.
- Automating some of the tasks such as sending tracking numbers through dedicated apps.
- Hiring virtual assistants for doing customer support with clear explanation on what to do in replying to customers’ inquiries.
5 – You Need to Hire Employees When Scaling
This dropshipping disadvantage is relative.
I personally am not the best when hiring and managing others, but some people find it better for them.
So, this can only sometimes be an issue.
In order to make things easier on yourself, try to automate the repetitive tasks when possible, and only hire others for the tasks that cannot be fully automated such as replying to customers’ emails and fulfilling orders.
You can find these people on online job marketplaces like Firverr and Upwork.
Try to give your employees pre-written scripts and “if this, then that” operation procedures.
And keep everything documented and easy to reach so that you can replace anyone who is unavailable, temporarily or permanently, for some reason.
6 – Additional Budget for Advertising
This is not always a problem as you can use one of the many free promotional methods such as seo, free social advertising, Pinterest pins, …etc.
But if you want faster testing for the products and faster results, you may need to spend some money on the advertising.
Normally, starting with Facebook Ads or influencer marketing on Instagram can be done for less than $1,000 in order to get profitable, and then the business should start spending on itself.
The bright side…
Remember that you cannot start a brick and mortar business or a physical store without paying thousands on decoration, thousands on inventory, stay in the place all day long, or hire others, and wait until you start getting customers.
7 – Lots of Scam Artists
There are two types of scammers in the dropshipping industry:
- The scam dropshippers who sell very bad products and don’t give refunds when requested, which lead to people not trusting small online stores, and thus, negatively affecting your store.
- The dropshipping scam “gurus” who sell their courses for $1,000, $2,000, or even more, promising you to teach you magical ways of getting rich overnight.
The solution to the first type is to make your store look nice and brandable, add the important pages, offer money back guarantee, sell only good products from reliable suppliers, be positive in responding to customer’s requests, and give refund when the customer is unsatisfied.
And the solution to the second kind of dropshipping scam is to look for unbiased reviews before you purchase any course, and get one course that is comprehensive and sold at a reasonable price, like eCom Elites, and not go and purchase every single course that is promoted to you.
8 – Lots of Competitors & Easy Product Saturation
Because the barrier of entry to the dropshipping model is very low, lots of people started doing it, and this led, like with any other business model, to the rise of copy-cats.
These are the ones that would see one dropshipping store selling a certain product, they will go and try to sell the same product to the same people, which leads to saturation and makes you need to keep finding new products to sell.
The solution to this is to build a trustable store and make your customers happy so that they don’t go to other stores that they haven’t tried even if they sell at a lower price.
Also, focus on building your email list and keep promoting to your existing customers through emails by sending coupon codes and promotions, and promote to them new products once you add them to your store, so that they hear about these products from you first.
Also, keep exploring new audiences and markets, and keep researching new products.
9 – Payment Gateway Difficulties
One of the most common problems with dropshipping is finding a payment gateway to receive payments on your store.
While online store builders like Shopify makes it easy to integrate your dropshipping store, sometimes you face issues with the payment gateways themselves as some of them hold the money for a few weeks before sending you the money, some require you to have a registered company in order to work with them, and some might suspend your account if you get a lot of disputes and charge backs from customers.
This is the main con of dropshipping, especially for those in developing countries where there are many obstacles.
And sometimes PayPal holds the money you receives if they suspect that your store is associated with fraud risk.
The solution is, again, to build a trustable store, sell good products, add all the legal pages, build a good relationship with customers and be initiative in approaching them regarding shipping delays, and give refunds by yourself if deserved.
Another solution for those unable to start because they can’t get a payment gateway in order to accept credit card payments is to contact Stripe Atlas in order to open an LLC in USA or in UK, which then allows you to use Stripe as a payment gateway.
Conclusion – The Winner of Advantages vs. Disadvantages of Dropshipping
Like any business model, as you saw, dropshipping comes with many pros and cons.
The advantages of dropshipping seem to overweigh the disadvantages.
It is beginner-friendly, can be started easily, fast, and at a low cost, and it is scalable and flexible.
While the disadvantages come mainly in the form of personal and characteristic preferences such as dealing with customers and hiring employees, and the limitations with accepting payments.
Depending on your situation, you decide if dropshipping is for you or not.
But in general, it is one of the most beginner-friendly models to start with, but you need to treat it as a business and be consistent and persistent until you succeed.
If you feel that the pros of dropshipping overweigh the cons based on your situation, then you may start with it, and the best way is to get a step-by-step training like the ones by Shopify Compass or by Franklin Hatchett.
And you may use a platform like Shopify that is really good for beginners.
And if you need any help in anything, or if you still have any question regarding the dropshipping pros and cons, please, tell me in the comments’ section below and I will be happy to answer you asap 🙂