What is Dropshipping?
Dropshipping is a business model that allows eCommerce merchants to sell products without stocking their own inventory. The retailer purchases needed inventory from a third-party supplier and has the products shipped directly to the customer.
The third-party suppliers that directly deliver products for a dropshipping retailer could be a manufacturer, dropship wholesaler or a dropship aggregator. The manufacturer is the party that makes the products. On the other hand, a dropship wholesaler buys bulk quantities of products from a manufacturer and then sells to retailers. A dropship aggregator is a wholesaler who buys products from multiple manufacturers.
The biggest advantage to dropshipping is that you don’t have to pay for stock. This makes it appealing to startups on a tight budget. You won’t have to buy a product unless it has been paid for by the customer.
Since you won’t need to buy inventory or manage a warehouse, dropshipping eliminates the stress of overhead costs. These costs include inventory management, warehousing, production, and shipping costs.
With dropshipping, you are not responsible for sourcing, packaging or delivery of the product. Therefore, you won’t have to worry about the additional costs incurred in the whole process. You could just forward your customer’s request to a third-party supplier or import goods with a company such as AliExpress.
You can also provide a wide variety of products to test the appetite of your customers. This helps you experiment new product offerings and expand your product category listing.
Even though both dropshipping and third-party fulfillment provides an order fulfillment process that is outsourced, they are different eCommerce business models.
Third-party fulfillment is where you use a specific fulfillment center and send your inventory in bulk. They will handle the packaging and shipping logistics to customers.
Now let’s look at the key differences between dropshipping and third-party fulfillment.
Dropshipping is usually lauded as an easy way to get into the eCommerce business. Even though there’s less up-front financial risk, complex shipping, low profit margins, and little quality control are hazards you just can’t ignore.
If you’re thinking about starting a dropshipping business through Shopify or a similar platform, you need to rethink it.
As a dropshipper, you don’t control core processes such as packing, shipping, and returns processing. These processes ultimately reflect your brand image to customers so you end up losing out on opportunities to showcase who you are.
Some dropshipping suppliers impose minimum order quantity requirements when it comes to branding. When customers can’t tell your brand apart from your competitors, it’s hard to come up with a unique selling proposition so you lose competitive advantage.
Dropshipping retailers often find themselves in the crossfire between customers who cancel orders and their suppliers when an order gets lost or damaged. In both cases, you have zero control but total responsibility.
To make matters worse, you can’t handle returns. You can only hope that your wholesaler is willing to take back faulty products. Having your hands tied on customer service matters creates negative shopping experiences for them.
Due to the large number of customer complaints, eCommerce and ad platforms have banned dropshipping accounts. Facebook recently disabled all ad accounts of businesses using dropshipping. Clearly, dropshipping is considered as an unreliable business model.
Just like dropshipping, NextSmartShip makes order fulfillment simple. We are located in the shipping hub of the world, Shenzhen, China. We take care of sourcing, packaging or delivery so you don’t have to.
We also provide 90-day free storage to reduce your fulfillment budget as well a global fulfillment.
Unlike dropshipping, we have no minimum order quantity requirement. This allows you to brand products and have a competitive advantage. NextSmartShip offers packing customization services to make sure you have that distinguishing factor on lock.
NextSmartShip doesn’t impose item receiving fees so you don’t have to worry about getting charged by the hour or per unit. This potentially reduces your overhead costs. You can also use the small inventory plus fast turnover method.
NextSmartShip ensures that you get fast and affordable shipping. We cooperate with leading shipping shipping couriers such as FedEx, DHL, SF Express, and RoyalMail to provide global shipping.
Our main focus is fulfilling orders, not like the dropshipping suppliers who always want to get more orders. We understand that logistics are ever evolving and that’s why we offer multiple shipping solutions. We do this by monitoring the state of each shipping avenue constantly to make sure your package gets to your customers on time.