Although drop shipping is a business offers a number of distinct advantages it also has a few disadvantages. The low barriers to entry, the no set location and competitive nature of e-commerce stores can make drop shipping a bit harder.
Depending upon what niche you enter, you may find that other people who are also drop shipping mean that you need to have low margins to compete. This is especially true due to the low barriers of entry, minimal overhead costs and the fact that they have invested so little to get started means that some people are willing to sell a rock bottom prices. There are ways to overcome this issue which will cover in more detail later on.
Relying on a third party.
It is an unfortunate fact of life people to make errors. It is important to remember that even great suppliers can occasionally have issues. And as you are the person who has been dealing directly with the customer, you will be the person who is ultimately blamed when this occurs.
Your quickly find that although some suppliers offer a rock bottom prices they may not have the internal processes to cope with small orders, or that the items they are selling are of mediocre quality. Again there are ways to minimise this issue, mainly by using only high quality consistently performing suppliers.
To make it even worse there is the possibility that supplier you actually using is out to scam you rip you off. To find out more about this have a look at Not getting scammed and watching out for fake drop ship suppliers
Overselling of stock.
One benefit of holding stock is that you have it on hand and are in direct control of it. You can easily go out to the warehouse count how many units are available and only sell that amount. But when you are using multiple suppliers (many who are not local to you) you do not have this sort of control. As long as the suppliers keep their stock updated and you have a way to continuously sync this data you can minimise this issue.
Making things more complex.
Although it is a great idea to work with multiple different suppliers, this in itself can add an additional level of complexity. Remembering who ships what, how they ship items and also the general shipping timeframes are all things you need to have under control.
Having multiple suppliers with different products can also pose additional shipping issues. For example a customer orders five products from your website from four different suppliers, you have to workout what you are going to charge them for shipping to ensure you do not make a loss. Although you may be tempted to, it is not the best idea to pass all the shipping costs along to the customer as they will think you are ripping them off.
So is drop shipping right for you?
Although drop shipping is a great way to sell online is not without its own risks and issues. It can add additional stress to online selling and only you can decide if it is right for you. There are many advantages to selling using dropship model, to see a few of these make sure you check out The benefits of drop shipping