The Hard Reality of Dropshipping Business

Published April 4, 2021

Are you planning to start a dropshipping business? Find out the truths behind this eCommerce business model and check for yourself whether it is the right venture for you. 

Dropshipping Business

These days many are searching for ways to earn money easily. It is no wonder why a lot of online business models gained popularity in a short period. And one product of evolving eCommerce is dropshipping.

What is Dropshipping? 

Chances are you might have heard about this business model online or from a friend in this venture. The dropshipping business model is quite different from the traditional scheme you’re familiar with. It is an order fulfillment method, wherein the seller does not have to keep products in stock. The seller only sells the products but it is the supplier who ships them. Hence, the seller passes the sales order to a third-party supplier who then sends the orders to the customers.

Many became attracted to this selling method since it requires less effort on the part of the seller. Likewise, the seller can still gain profit despite having less work. Because of its effortless business scheme, many came to believe that dropshipping is a good way to earn money fast.

It is a misconception that dropshipping is a get-rich-quick scheme. This business scheme has many risks. When not done properly, it could cause the immediate downfall of the business. If you have plans to enter this industry, here are a few reminders about the reality of the eCommerce model.

#1 Don’t Expect High-Profit Margin

Remember this: dropshipping is not the fastest way to get rich. This business model has low-profit margins because the sales go to the supplier. Since the seller puts lesser money in, then the seller earns lesser.

The seller only earns the commission agreed upon from the contract with the supplier.

Thus, make sure to inspect your business and the opportunities it offers as you learn how to legally start a dropshipping business. By doing so, you can prevent bigger losses in the future.

#2 Strong Competition

Dropshipping is a highly competitive industry. Take note that a supplier works with multiple sellers. Moreover, this business has little capital and thinner barriers. Therefore, many can enter the industry fast and easily, which means a lot of competition. As a result, some sellers are forced to reduce their prices to gain revenues. Unfortunately, it often leads to an even thinner profit margin.

#3 Rampant Scam Deals

Fraud deals and contracts are not a new thing in online business. However, it is more rampant in dropshipping business.

Some suppliers pretend to be a legal business that often leads to sellers getting scammed. A seller has to be observant and smart when looking for a supplier. Examine the feedback about the company and its terms.

#4 Supplier Has the Overall Control on Supplies

As the seller, you get feedback from customers, including their complaints, even though the goods came from a third-party supplier. Having no control over the supply-chain is detrimental for a growing business. The seller has to answer the customer’s complaints while often gets away with it. Likewise, there is the issue of communication. It is challenging to communicate the problems from the customer to the supplier. As a result, issues take longer to resolve, which leads to poor customer service.

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