Dropshipping is a business model where the seller does not hold any inventory, instead, the orders are fulfilled by a third-party supplier. This business model has gained popularity in recent years due to the many benefits it offers.
Let’s take a closer look at some of the amazing benefits of dropshipping.
- No Need To Hold Inventory
- Low Capital Requirement
- No Real Estate And Insurance Required
- Low Risk Involved
- No HR Costs
- No Risk Of Unsold Stock
- Good For Entry-Level Businesses
- Create Alternate Streams Of Income
- Pursue It As Your Side Hustle
- Test New Products
1. No Need To Hold Inventory
One of the foremost advantages of dropshipping is that there is no need for inventory management as the third-party will fulfill the orders from their inventory. Before forwarding the order to them, you can compare the best pricing from all the suppliers and make your decision. Thus, all you need to do is list down the items on your store and directly sell them.
2. Low Capital Requirement
Secondly, dropshipping requires a low capital requirement. As mentioned earlier, a majority of liabilities are not directly concerned with you. This translates to a lower requirement of capital for investments.
3. No Real Estate And Insurance Required
There is no need to purchase or rent a warehouse. A lot of newbies in e-commerce either use their homes or rent garages. The bigger players also need to pay for insurances of the place and stock in many cases. Hence, dropshipping is a better alternative.
4. Low Risk Involved
The only risk involved in the model is that the client considers you responsible for fulfilling their orders. You have to handle any mishap. As long as there are no problems, you have virtually zero risks.
5. No HR Costs
There are no HR costs. Since most of the work is done by third parties, you need not hire staff on your side. The entire operations on your end include only selecting products and deciding pricing.
6. No Risk of Unsold Stock
As you don’t own any of the stock or make any payment in advance, there is no scope of making losses on unsold stock. The cash cycle starts only after receiving demand for listed items. You don’t need to make any commitments to make a purchase to any of your suppliers.
7. Good For Entry-Level Businesses
Dropshipping is good for entry-level businesses. A lot of people fear to make the first move. They might want to test if an idea works or not. In such cases, having minimal investments gives the liberty to experiment without hurting their pockets.
8. Create Alternate Streams of Income
Dropshipping creates alternate streams of income. Many online stores have access to a client base that purchases items related to the store’s products. If the store doesn’t sell them, it can use dropshipping to generate alternate revenue streams.
9. Pursue It As Your Side Hustle
Dropshipping can be pursued as a side hustle. Are you looking forward to quitting your 9-to-5 job and kick-start your venture? If yes, then you can join the internet-driven entrepreneurship wagon as a side hustle. Working after office hours is totally okay as long as you look after essential stuff properly.
10. Test New Products
Finally, dropshipping allows you to test new products. Businesses can use it for selling products that aren’t a part of their lineup. You can test new merchandise without investing any significant amount and later spice up your product portfolio from self-sourced ones.
In conclusion, dropshipping is a profitable business model that has many advantages. From low capital requirements to no inventory management, this business model is ideal for those looking to start a business with minimal investment. With the ability to create alternate streams of income and pursue it as a side hustle, dropshipping is a great opportunity for entrepreneurs looking to enter the world of e-commerce.
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