As an ecommerce entrepreneur, you probably have questions about how to get your products to your customers. No matter whether you decide to manufacture products yourself or sell wholesale, you need a system in place to fulfill your orders and keep your customers happy.

Dropshipping is a fulfillment model where a store owner buys products individually from a supplier and has them shipped directly to the customer from the supplier. The store owner keeps no inventory. They simply partner with a supplier, list the products for sale, and connect with customers.

For all of the unique advantages dropshipping provides, it’s not without its setbacks. Here are a few pros and cons you should consider about dropshipping for your ecommerce business.

Pros of drop shipping

Launch without a lot of capital

With drop shipping, you don’t need to purchase a large inventory or warehouse space to start a business. You can be up and running with just a few supplier agreements and a basic ecommerce website. You pay for products as you sell products, and not a moment before. This lowers your startup costs and your overall risk.

Less all-around hassle

There are so many things you don’t have to worry about as a drop shipper. Not only do you have very low up-front costs, you also don’t have to deal with inventory-carrying costs, warehousing, pick-pack-ship staffing, or shipping. Since your supplier takes care of these things, you have more time to focus on making sales and building the business.

Freedom and flexibility

When offering a new product is as easy as adding a new product page to your website, you can take advantage of some big opportunities. First of all, your business is able to stay nimble and respond quickly to demands and shifts in the market.

You are also able to experiment with different product offerings and grow your enterprise ecommerce store quickly. Best of all, perhaps, is the amount of freedom you have as a business owner without being tied to a specific location.

The cons of dropshipping

Thinner profit margins

For a supplier to dropship individual products for you, it takes extra time, labor, and logistical coordination. You will be charged extra for the privilege of drop shipping compared to purchasing products wholesale.

This extra charge eats into your profit margin, making it more challenging for your business to stay in the green. It’s also more challenging to stay competitive in the marketplace with lower priced products available from non-drop shippers.

Less control over stocking, packaging, and shipping

As an online business owner, the first physical interaction you will have with your customer will be when they receive their package. As a drop shipper, you don’t have a whole lot of control over what the unpacking experience will be like.

In fact, there’s a lot of things you don’t have control over. You don’t have control over sudden out-of-stock items or late shipments. This leaves you vulnerable to angry customer interactions with limited ability to fix the situation.

Low barrier to entry leads to more competition

Dropshipping essentially makes you a middleman. Many online retailers are using the same suppliers and selling the same products that you are. That means a lot of competition and not a lot of ways to differentiate your company. You will need to learn how to brand yourself and offer additional value in order to stand out from the crowd.

Sometimes, despite the drawbacks, it makes sense to dropship anyway. It’s a great business model that you can get into without a huge up-front investment. All you have to do is find products you can dropship profitably, connect with a reliable supplier, setup your ecommerce website, and bring in customers. Definitely consider dropshipping as a fulfillment method for your ecommerce store.