Selling online has become more and more prominent over the last couple of years – the pandemic and the restrictions it brought with it have forced a large number of businesses to resort to selling their products via eCommerce routes. This has meant a huge rise in the requirement for both drop shipping and eCommerce fulfilment, as a lot of business are finding they do not have the space to store the goods they are wanting to sell.
As with everything, these 2 methods have their advantages and disadvantages. We’ve been looking into them both to see which type of selling would benefit certain businesses more, and we wanted to provide as much information to help you choose what’s best for your business going forward.
Advantages:
Drop shipping is great for many reasons. Firstly, the shipping process of drop shipping is completely hassle-free for the business using it. This is because they quite literally deal with none of the process, it is all done by the supplier of the goods. This often means that the owner of the business is freed up to do other things, like the advertising or researching into new potential stock. Drop shipping allows you the time and space to branch out and really have a go at growing your business to its full potential, and this is often invaluable to a small/medium business.
Drop shipping is also very profitable when successfully used. The products you can buy from suppliers are often very cheap, and the potential selling prices can be very high, meaning the margin you can make is more than you may make if you bought the products outright. The only issue with this is that it leads to a high level of competition and companies often try to undercut your prices. This happens all of the time on platforms such as eBay and Amazon, where drop shippers typically sell their products.
Disadvantages:
There are, of course, down sides to drop shipping. The advertising you need to do can be very time consuming – you’re essentially battling for a top spot on Google or Facebook. These days, drop shipping is used by many more businesses than it ever was, so it can be very difficult and also very costly to get your business noticed among the others.
Another negative aspect of drop shipping is that you have no control over what is being sent. Due to not being able to see the items before they are being sent, there is more room for error and this can lead to incorrect products being sent out, which is obviously not a good impression for a customer who has ordered from you. The checks that you would typically implement into your shipping process are not there when someone else is packing the goods for you.
Advantages:
Selling your products via eCommerce websites is a great way to do business as it allows so much freedom in terms of advertising and branding. The sites that you can sell on vary massively in terms of target markets, so the opportunity to get your products seen by different demographics is always there. For example, sites like Etsy which target a more artsy kind of audience are great if this is your kind of product – it cuts out the process of having to siphon through all the search results to find the products you’re looking for, which is why people often use them.
Another big reason why eCommerce has become so prominent over the last few years is the simplicity. Now, I’m not saying that you can put anything on eBay and it will sell instantly, as there is always some work to do, but the process of doing so is much less demanding when it comes to eCommerce. The work only really has to be done once (thumbnails, captions, details, etc.) and updated every now and then when the info changes. This is a big benefit as it allows you to spend your time doing other tasks that will help to grow your business rather than spending all your time on the advertising and contending with the competition.
Disadvantages:
A disadvantage of eCommerce that’s very similar to drop shipping is the competition. This is not so prevalent in terms of advertising, but more about prices. If you manufacture your own products, or even if you import them, you have to find a selling price that works. If you go too high, consumers will just buy from your competitors instead, but if you go too low, your profit margins could be severely reduced, to the point where you are making minimal money back from your own business. This is mainly an issue for newer businesses, but can always apply to a much larger scale as well, so you definitely need to be aware of that.
Another of the disadvantages that eCommerce businesses often struggle with is the actual legwork of shipping and dispatches. The time and effort, along with the supplies, that it takes to be able to ship out your goods is often something people starting new businesses disregard, but it can take up a massive amount of time and prevent you from doing anything else for your business if you’re not prepared. Packaging is not cheap, and it certainly isn’t easy to do, so it would be something to consider when preparing your new business.
In summary, both of these business methods have their ups and downs. I’m certainly not going to give you a yes or no answer when it comes to setting up your business, as it’s completely at your discretion, but I would definitely advise to do your research thoroughly. The decision is ultimately yours, but don’t go rushing into it. I hope this post helps you in one way or another. If you’re looking for some inspiration, I’ve linked an example for each of type of business below:
Example of an eCommerce business – ASOS
Example of a drop shipping company – Wholesale2B
From The Team @ Cloud9 x
