The world of eCommerce has changed a lot since it first started out. Even if you just started out in dropshipping, there’s no reason you can’t own your own stock too.
Many business owners choose not to because there are concerns about physical inventory, but it has become easier, allowing business owners to diversify how they want to run their businesses in a way that is more comfortable for them.
What is Dropshipping?
It is a method of supply chain management where you transfer customer orders to a wholesaler or manufacturer and then ship the products to the customers. It’s basically working as the middleman without having any physical inventory. In this way, you can use any ecommerce payment gateway to receive payments instead of waiting for products to sell.
The benefits of this process is that it’s low-risk, you don’t need a lot of capital to start, and everything can be remotely operated. However, there are low profit margins and third-party errors occur on the part of the manufacturer or retailer, leaving you with the responsibility of apologizing to the customer.
Benefits of Having Inventory
Having a physical stock of products means that everything is ready for sale as soon as a customer makes a purchase. It has to be carefully manage to ensure you have the right numbers and targets have been set so that you can replenish stock as needed.
By holding stock, you can provide better customer service by not having any middlemen working for you. You can provide bulk discounts to customers too if they choose to order more products. Lastly, you provide an experience that matches your brand and speaks for your company that customers will talk about.
Deciding Between Dropshipping and Inventory
There are some basic questions you need to ask yourself if you’re deciding to transition from dropshipping to holding your own inventory:
- do you have a lot of time? Having to stock your own products and ensure that you’re never running low eats up a lot of time. If you’re not interested in managing stock as well as fulfilling customer orders, then this might not be for you.
- do you have capital? Stocking inventory means that you have to have the physical space needed to keep inventory, and that can cost a lot of money. if you don’t have a lot of capital to work with, then dropshipping might be a better option.
- can you exercise quality control? If you need the control over supplying good quality products to your customers instead of relying on suppliers, then holding your own inventory is definitely a better option.
Dropshipping can be a good business model for those who are looking to break into the ecommerce world. But if you’re already in the business and looking to increase your profit margins, then owning your own stock could be what’s right for you. Consider making the transition once you’ve done all the market research you need and see if you have what it takes to make yourself stand out from the rest.
