-Deva Narayan
With the advent of e-commerce in India and the low entry barrier especially in a business model like Dropshipping, the last 2-3 years have seen an enormous increase of aspiring entrepreneurs wanting to jump onto the e-commerce bandwagon. Dropshipping gives you the ability to start selling online without having to invest thousands of dollars in inventory. With drop shipping, you make a sale first before buying anything from the supplier. Then send the order details to your supplier who will ship it on your behalf to your customer.
What Makes Dropshipping So Good?
The major benefit of starting a dropshipping business is that it requires little upfront investment costs instead anyone can pretty much set up their online store with just a website and reliable supplier. This alone makes it viable for most people, including young entrepreneurs and small business owners who simply do not have the resources or want as much risk involved when starting their business venture in a new economy industry such as e-commerce. Another advantage is that it’s convenient and flexible; you get to test new products & niches plus there are no limitations on how long or short your entrepreneur journey should be.
Another benefit is that you can scale your business quickly. Since you don’t need to manually fulfill each order, it’s relatively easy to scale a dropshipping business. However, low-margin products or consumer goods with high volume can present some logistical challenges that would likely require a 3PL. But in general, if you’ve proven your product and market viability through dropshipping and are looking to scale rapidly, moving into full-blown warehousing operations will likely be atypical for most consumer goods startups.
It’s location-independent. Because you don’t have to worry about fulfillment or running a warehouse, it’s possible to run a dropshipping business from anywhere with a laptop and an internet connection — making it a perfect lifestyle business or side hustle.
The Setbacks of Dropshipping
But just like with the pros of dropshipping, there are cons as well – one of the biggest ones being low margins. Since margins on products are typically lower for drop shippers vs. creating your products and selling them wholesale OR online retailers selling via Amazon/Google/eBay/etc., the power rests squarely in your supplier’s hands. Most suppliers will sell similar items to many different retailers, meaning that competition is steep.
Another problem is that because you’re not shipping goods yourself (or overseeing the process), it’s hard to control if something goes wrong with quality checks.
Shipping times can vary depending on where the supplier is located relative to the end customer. If suppliers stock out of inventory or face other frustrating supply chain issues, this could reflect negatively on your business even if their actions were completely out of your control!
Handling customers
Customer service can be another pain point. Dealing with returns, exchanges, and customer inquiries can be difficult when you don’t physically have the product in your possession. If a customer can’t return an item to the retailer they bought it from then they’re likely to turn to you for help, which means you’ll need to be fluent in the supplier’s return policies.
Miscommunications between you and the supplier or issues within their company may cause a delay with customer returns or exchanges resulting in angry customers who will expect you to deal with it since it was technically your sale. The fact that this business model is dependent on third-party suppliers creates challenging relationships that are tough to outsource or hire account managers for. This also makes it hard for your brand to stand out; if most drop shippers are selling similar items coming from the same suppliers then what sets your brand apart from theirs?
In conclusion, while dropshipping in India offers numerous benefits such as low startup costs, flexibility, and scalability, it also presents significant challenges like low-profit margins, supply chain issues, and customer service difficulties. Entrepreneurs considering this business model should weigh these pros and cons carefully and develop strategies to mitigate the potential downsides. With the right approach, dropshipping can be a viable and profitable venture in the rapidly growing Indian e-commerce market.