The greatest disadvantage of working with drop shippers is lack of control. Once you sell the product, they will take care of everything for you. At least, you hope so. Do your homework prior to committing to a drop shipper. Search online for reviews and comments about the company. Visit blogs and forums and try to find out as much as you can. It requires a lot of work to set up your site for a drop shipper. Make sure you only invest your time in a company that is reputable. If you run across a company nobody has ever heard of before look for another one. Let other resellers go through the growing pains with a new drop shipper. Check back with the company six months or a year later.
Your reputation rides on partnering with a drop shipper. You can only be as good as they are. If they have poor fulfillment, you have poor fulfillment. If they offer low quality products; slow service; inaccurate shipping; awful customer service, you will hear about it. Your customers have no idea that terrible shopping experience is not your fault. To them the drop shipper is invisible.
In addition to the lack of control, profit margins may be unattractive while working with a drop shipper. Because the barrier of entry is low, be ready for plenty of competition. There are a lot of people online who are quite happy with the low investment model of working with drop shippers. Consequently, many online businesses that solely rely on drop shippers finding themselves working forever-narrowing profit margins. When it’s all said and done, you may find yourself in a less than desirable situation with little or no profit after the sale.
Your best bet is to find a drop shipper that is the manufacturer. The more successfully you eliminate the middlemen from your supply chain the more success you will have. There are many of manufacturers who will drop-ship for you. A great place to start your search is in a business database such as the Thomas Register Directory. The listing is available online at wwwthomasnetdotcom.
Building your business around drop shippers could prove to be risky business. Instead, consider making such suppliers just one dimension of your sourcing strategy. For example, if customers consistently ask for something related to your product line that you don’t carry; a drop-shipper may be a convenient option. This is a win-win situation for you and your customers. Working with drop shippers may help you test sell a product before making it part of your own inventory. If you can consistently sell a product through a drop shipper, it may be time to make it part of your in house inventory.
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