Things to Consider Before Employing E-Commerce-Dropshipping

Despite its worldwide popularity, dropshipping is not always the ideal solution for every business. The dropshipping strategy, coupled with higher liability rates, may not be the right one in certain circumstances. It's important to fully understand the industry and compare its pros and cons before you make the switch.

In this article, we'll look at the importance of dropshipping from an online perspective, evaluate its pros and cons, and discuss what to consider before entering this space.

Low overheads for small businesses 

Aside from their initial capital, brands also save on long-term overheads. There's no need to spend money on managing a warehouse, and there's no need to replenish or resupply your own stock. This also means no expensive staff or storage fees, which on average account for almost 10% of annual overheads.

Minimal fixed costs 

As you've already experienced, with dropshipping, you don't have to worry about purchasing the inventory you need or managing your warehouse. Your fixed costs are therefore very low. For example, many successful dropshipping stores are based on so-called home-based businesses and don't require much more than a laptop, a working internet connection, an email address, and a few recurring costs and expenses. As your dropshipping business grows, these costs will most likely increase. However, they are still very low compared to traditional businesses.

Solid strategy for testing new items 

Dropshipping allows brands to experiment with new products without investing in expensive or long-term development processes. E-commerce brands can test new inventory and bundling opportunities with extremely low risk by using a third-party fulfillment provider instead of buying all the inventory and then finding that no one wants to buy it.

Considering that 30% of a company's inventory is slow-moving or "dead", it pays to test before you buy.

Easily scalable inventory needs 

Since 66% of online consumers would rather buy from competitors with more shipping options, continuous scaling is crucial for the modern business. However, scaling inventory needs can be difficult with traditional fulfillment processes. When you work with a good dropshipper, e-commerce businesses have less inventory to track, can forecast items less frequently, and have more shipping options over time.