Drop shipping has gained a pretty bad reputation over the years. Even a simple internet search will bring up several reasons why you should be wary of using the model. Many entrepreneurs choose to steer clear of it because of these caveats. Drop shipping is not a bad model, however. Like any other model, it has its advantages and disadvantages. You can avoid issues if you are careful, and build a very lucrative business with drop shipping.
Here are 4 reasons why drop shipping is so derogated, and the truth behind these knocks.
(1) Drop Shipping Abuse
The drop shipping business model has been abused by many. People have been trying to use it to build businesses for years. They think that they can leverage the model to quickly set up a business and start making money. Most people who use drop shipping don’t really understand it. They read about it, probably on the internet, and think it’s a great idea. They start using it without doing much research or really learning about how it works. The inevitable result is that drop shipping doesn’t work for them, and they become disappointed or even angry. They begin to post a lot of negative comments about it, and others jump on the bandwagon without knowing the truth behind the claims.
The truth is that these people have abused how drop shipping works. They looked at the basics and thought that they could use it to make some quick money. When their pipe dreams unavoidably crumble, they feel let down by the model. The fact is that it’s their own lack of preparation that has thwarted their efforts – if they actually made any effort at all to set it up.
(2) Get Rich Quick Scams
Scammers abound on the internet. We know this and yet they still manage to find ways to attract their next victims. Drop shipping is a very attractive business model. You don’t need much capital to set it up, and you can still make good profits and grow. Scammers latch on to this alluring facet of drop shipping and use it to create illusions of instant wealth. When people fall for it, they quickly realize that drop shipping will not make them rich overnight. They don’t really have a chance of catching the scammer who duped them, so they go after the model instead.
Once again, their frustration is really the result of their own lack of knowledge about and experience with drop shipping. Maybe they are also more than a little bit annoyed at themselves for being so gullible. They were easily deceived by extravagant claims and were led by the allure of riches rather than good sense. Drop shipping is by no means a quick money model. You don’t need lots of money to get started with it, but you do need to work hard at it to get it set up properly.
(3) Low Margins
Drop shipping is unappealing to many business owners because of its reputed low margins. This looks especially bad in the eyes of aspiring entrepreneurs. They are excited about the prospect of financial freedom that business brings, and are turned off by a model that doesn’t promise them fat profits. It is true that drop shipping offers lower margins than the more traditional models, such as wholesale. Drop shipping can, however, bring in sizeable profits if it is properly managed.
Some business owners choose to focus on margins and the size of their profit slices. This can be a dangerously narrow view that blocks them from seeing and seizing good opportunities. Drop shipping can bring in very good revenue if you can look past the margins to see the big picture.
(4) Reputation at Stake
Many warn against doing drop shipping because it means a loss of control over your reputation. When you drop ship, you rely on your suppliers to ship out product to your customers directly. Since you don’t receive any product, you can’t be sure that what you are selling is of good quality. You can ask for samples and check in on your suppliers from time to time, but that’s all. You can never be completely sure that you are dealing with reliable partners 100% of the time. If you are working with a shady supplier, your store will get a lot of complaints and bad reviews. Your business will suffer, possibly to the point where you have to close down.
Though this risk is real, it is not a good reason to discount the drop shipping model. There are ways that you can avoid this situation. First, know that suppliers are a very important link in your chain, particularly with drop shipping. Make it a point to focus on finding good suppliers. Second, focus on building relationships with your suppliers. Don’t just Google some random website and strike a deal with the first supplier who answers your email. Do diligent research and be wary of who you partner with. Third, test several suppliers out – two or three per product – to see who are the best. Then, contact a few more so that you have a backup or two in case anything goes wrong.
Drop shipping has really gotten a bad rap that it by no means deserves. It is a very good model that is successfully applied by millions of sellers. It has survived through the decades and helped many entrepreneurs to get started when they would never have been able to get into business otherwise. Drop shipping simply requires that you play by the rules if you want to succeed. At the end of the day, this is really no different than any other business model you might try.