#ECxFAQ is a section where I will answer in detail some of the most commonly asked questions from my readers.
If you have thought about starting an online business, one of the most common things you would have thought about doing is drop shipping.
The most attractive part of a drop shipping business is that you do not need to spend money to stock up on inventory. Instead, you send your customer orders to your suppliers and they will help you fulfill your orders.
Though, does this make drop shipping the easiest online business for beginners to get started in?
Here’s what I have to say:
Drop shipping is a method of order fulfillment. The only thing that differentiates drop shipping from a normal online business is that you do not need to keep stock or fulfill the orders yourself. Your supplier can help you with both.
The rest of the business stays the same. You will still need to set up your store, promote products and do customer service.
The benefit of using drop shipping is that you will not need to save up capital to stock up on inventory. This means you can get started for cheaper than if you had to buy stock.
Other than that, with no inventory, you also will not carry the risk of unsold inventory. If any of the products you promote don’t sell, you can promote another product. This can be a huge advantage for people with limited capital.
But do these advantages mean that drop shipping is the easiest way for beginners to get started with an online business?
To me, other than the benefit of not needing to spend money on inventory, drop shipping is not that much easier to get started with an online business compared with normal online businesses.
You will still need to spend a lot of time and effort in marketing your products and closing sales. In fact, for beginners, this may be the hardest part of all. If you do not know how to get sales, it doesn’t matter that much how easily you can get inventory.
On top of that, you will also be making a lot less money with drop shipping than you would be making by keeping your own inventory. The margin on drop shipping can be anywhere between 8 – 15% only as compared to a possible 20 – 200% margin on inventory you keep yourself.
In conclusion: Drop shipping can help reduce the cost of starting a business. This can be a huge advantage for people who want to get started but have limited capital to stock up on inventory.
But other than a lower starting capital, drop shipping is not the easiest ways to start an online business. You should still expect to work just as hard as a non-drop shipping business if you want to build a sustainable income stream with drop shipping. You would also need to bear with a lower margin.
What do you think? Do you think drop shipping can make it easier for beginners to start an online business?