The dropshipping model can be a solution and, more importantly, beneficial to an eCommerce store if you’re a business owner looking to ship products for your online store (i.e., a traditional retail business selling t-shirts) without the hassle of having to stock the inventory yourself — or if potentially add new products.

When a consumer places an order online, the drop shipping service provider or company ships the item directly to the customer. It’s a way for large and small businesses to source products while conserving money and storage space.

Of course, this is easier said than done, so before you invest your savings in a dropshipping store, here are some things to consider.

Highly Competitive.

Overly optimistic entrepreneurs will always focus entirely on the “low overhead” part of the equation, ignoring the robust data presented above.

Because starting a dropshipping firm requires relatively little cash, there is a lot of harsh competition, with the most popular markets suffering more than others.

The larger a company is, the lower its markups can give the best prices.

You probably don’t have an exclusive agreement with your suppliers to make problems worse.

That means a variety of competitors could sell your products. If you’re a tiny business, your competitors with years of expertise will undercut your costs because they have the resources you don’t.

That means potential customers can get the same product for less money elsewhere, so why should they buy from you?

No Control Over The Supply Chain.

If customers complain about product quality, fulfillment timeliness, or return policies in traditional eCommerce, you can address the issues yourself.

Dropshipping puts business owners at the mercy of their suppliers, but you’re the one who needs to deal with your customers directly.

Dropshipping suppliers are trapped, with little choice but to hope that the supplier fixes the issues while comforting the consumer about something beyond their control.

Furthermore, communication is delayed when the drop shipper switches back and forth between the customer and the supplier. When people respond slowly, all communication comes to a halt, and problems take longer to resolve.

And if they’re loud about it, including on social media, those negative evaluations might derail your firm before it even gets off the ground.

Legal Liability Issues.

This isn’t a common issue for drop shippers, but it’s worth mentioning. Some suppliers aren’t as trustworthy as they seem, and you never know where your product comes from.

Even more dishonest are vendors who, on a regular basis, use a trademarked logo or another company’s intellectual property without permission.

A solid Dropshipping Agreement Contract can solve this possible problem. However, not every drop shipping service provider newbie is aware of this.

It’s something to bear in mind when making supplier selections.

The Final Words!

When used appropriately, dropshipping can be a very effective strategy.

However, as a firm grows larger, the reasons why it doesn’t work for new enterprises become less significant.

For example, a well-established company already has a steady stream of customers and doesn’t have to worry about building a brand.

Dropshipping is a terrific supplement for most seasoned eCommerce businesses, but don’t expect it to perform all of the heavy liftings.