Pros:
– Low start-up costs – Since you don’t need to purchase inventory upfront, the cost to get started with drop shipping is relatively low. This makes it easier for business owners who may not have access to large amounts of capital.
– Flexible business model – Since you don’t need to purchase inventory, you can add or remove products easily. This makes it easier to scale a drop shipping business as demand changes.
– Low overhead – Since there is no need to store and manage inventory, the overhead cost associated with drop shipping businesses is relatively low.
Cons:
– Low margins – Since drop shipping businesses don’t purchase large quantities of products at wholesale prices, the profit margin can be significantly lower than other businesses.
– Poor customer service – Without having direct control over the product or shipment, there is a risk of customers not receiving their order on time or in the correct condition.
– Dependence on suppliers – Drop shipping businesses are heavily dependent on their suppliers. If their supplier fails to deliver the product, it can have a major impact on customer satisfaction and orders.