Dropshipping has become one of the popular ways of generating revenue without actually holding the stock of the product. Since few years, this model of business has gained a new popularity in the market. It is assumed that dropshipping is dead in 2020. Let’s see how far it is true.
First of all, we will go through all about dropshipping such as its definition, pros & cons, etc.
What do you mean by Dropshipping?
A retail fulfillment method where you do not need to stock up the products you are selling is known as dropshipping. In this method, whenever an order is put through, the company buys the product from a third party and ships it directly to the customer. Thus the seller is not directly involved in handling of the products.
How it differs from standard retail?
Since the products are purchased from a third party- usually manufacturer or wholesaler, after the order is put through, the seller doesn’t require to stock up products or own inventory. Thus the overhead associated with warehouse is not involved here. This is the biggest difference between standard retail model and dropshipping.
How you could get benefit from Dropshipping?
Dropshipping is one of the best ways to start business for an aspiring entrepreneur. You can test various ideas and strategies for business easily and quickly to get an idea about the most demanding products in the market. Here are few benefits of dropshipping:
- You don’t need to invest a big amount of money upfront in your business. In this business model, you don’t need to buy a product until and unless you find a buyer for that product. You are not directly involved in buying and selling of the products; hence the risk associated with this is very less.
- It’s far easier to handle an ecommerce business that doesn’t involve any physical inventory to manage. You don’t need to pay for warehouse, packing and shipping for your order, tracking of inventory, handling return and replacement.
- You can run a home-based business easily. You don’t need to think about the overhead cost for warehousing and other things. You just need an internet connection and a laptop to start your business.
- As you don’t need a fixed location to carry out dropshipping business. You can do it from anywhere and thus you can avail benefits of flexibility.
- You don’t have to limit your product to some categories only. You can offer a variety of products to your customers without purchasing them.
- In traditional business approach, sales growth brings additional burden on manufacturing and suppliers which is not the case in Dropshipping. You only have to concentrate on sales.
What are the negative points of Dropshipping?
Yes, there are so many benefits of Dropshipping business model but you cannot say that there is no negative part. You should know it’s negative sides as well; here are few of those points:
- As there are low overhead cost and anyone can start with minimal investment, so a large population is starting their own business. This creates a fierce competition and it becomes a challenge for you to sell a significant amount of products.
- To stand out of the competition, you need to make your service astounding. If you are offering super shipping service, quality, and customer service still you will find difficulty to match your price. It means you have to work for low margin.
- You are outsourcing your product from various suppliers and they are supplying products to various dropshippers or others. It will be difficult for you to maintain inventory which changes continuously. Very few of them will be using such apps that inform you real-time inventory details. If you cannot track real-time inventory details, it will be difficult to track whether a product is in stock or not.
- As you have to work with different vendors to fulfill the requirement of products, it increases the complexities in the shipping process.
- Product is not yours and ofcourse any mistake such as wrong product, missing items, low quality, etc., will be your responsibility. You have to answer your customers for what you have nothing to do with. So, be ready to take another level of frustration.
When you should start dropshipping business?
Now you know what Dropshipping business is and what are the advantages and disadvantages of this business too. The next question would be, should you start dropshipping business and when. There is no right time to start anything new, if you want to do something to make money with little effort and investment, you should start this business now. If you are still confused as to whether you should start dropshipping business or not, then these four points will help you to take a decision:
- It takes nothing to start. You just need an internet connection and a computer to run your own business.
- You can live a flexible and free life as you will not be limited to a specific place and time.
- You don’t need to manage a lot for product manufacturing, shipping, packaging, etc.
- You can deal in a variety of product.
If you want to do such business that gives you flexibility, money, and freedom; you can consider dropshipping.
Is Dropshipping Dead In 2020?
These days, it is being said that Dropshipping is dead in 2020. Is it true? Let’s see more into this. Though Covid-19 lockdown situation has brought unfortunate circumstances to many business. It’s true that it has affected people’s buying habit and product demands as well. Many people lost their job affecting buying efficiency, closing of manufacturing unit affecting production efficiency, restricted supply chain movement affecting delivery and supply of items. All these have brought a significant change in Dropshipping for a shorter period of time. After lockdown, the market is coming into track and we can see a sudden spike in buying and selling of the products. So, it is quite wrong to say that dropshipping is dead in 2020.
How much dropshipping is worth in 2020
Every business has its own advantage and disadvantage and hard-work is always required for starting and improving a business. Dropshipping model has its own advantages but has its own negative sides as well that you will need to come over to succeed.
Most of the complexities associated with Dropshipping business model can be addressed through careful consideration and planning and help you build a profitable, successful and thriving business.
The Final Word
Dropshipping is not dead in 2020. It is still a profitable business model and you can can reap huge profits with the right insights. Also, it will bring a greater hope for you in coming days as well. You just need to adopt the healthy and right approach to market, advertisement, convince your audience, and delivery of the products.