Have you ever wondered if your business would benefit from drop-shipping? We weighed the pros and cons, so you don’t have to. Drop-shipping, or the ability to ship directly from a manufacturer or wholesaler to the end customer, has been around since the mail-order catalogs of the 50s through the 70s. Drop-shipping can look different depending on your business. Companies like Amazon, AliExpress, and Wayfair made their name with an extensive drop-ship business model. Say you sell table bases! Applying a drop-ship model to your business can look like selling table bases to restaurants, buying a variety of table bases to be used for an installation project, or whatever works best for you.
Many businesses keep stock on hand for customer orders, usually in on-site warehouses, stock rooms, etc. However, it’s not a feasible option for every business. If you sell hundreds of products in one order or a few days, it can be hard to keep enough stock in-house. Finding an adequate warehouse, tracking inventory, and losing shipments—it’s a lot of work. Drop-shipping can make all the difference for those who need an alternative.
PROS
- Reduced Risk
New or expanding businesses often require upfront investment through physical stock and financial backing. You can reduce that risk with drop-shipping. Without the need to hold inventory onsite, you can start selling now—rather than waiting for the shipment to come in, taking inventory, sorting, and storing! Not to mention, the less a product is handled, the less likely it will be mishandled.
- Variety
With drop-shipping, you can offer various products without the hassle of keeping inventory. Whether you sell table bases, restaurant equipment, commercial-grade furniture, or whatever you can think of—drop-shipping will help keep inventory worries at the bottom of your list. You’re free to offer as many variations as you prefer to reach a diverse customer base!
- Scalability
Drop-shipping gives you the advantage of scalability! With the flexibility that comes without physical inventory, you can add and discontinue products smoothly. This allows you to add new products or expand into different markets as you see fit. The best part? You can make product changes without running into significant obstacles, such as logistics and inventory.
- Focused Efforts
Drop-ship suppliers often handle most of the usual operational aspects of a retail business. With less on your plate, you can give more attention to other pressing tasks. Marketing, customer service, and expansion are all crucial to growing your business—and they all require time and effort. Drop-shipping can give you more time, especially if you don’t have the means for dedicated roles yet.
CONS
- Profit Margins
On the other hand, you may experience lower profit margins when compared to a traditional wholesale model. The other side of not holding inventory is paying for convenience—financially or otherwise. It’s necessary to find a supplier that works for you—one that doesn't punish you for using their services. Take time to think about what your business needs and could do without. Whether it’s a need for no minimums on orders, speedy order fulfillment, or specialized packaging—figure out your priorities and decide from there.
- Limited Control
Liability is rarely fun. And even less so when it’s out of your hands. Relying on suppliers for product quality, shipping times, and inventory can directly affect customer satisfaction. Your customers will want prompt answers. You want to find suppliers with clear policies to know when it’s your responsibility, theirs, or the end customer. Take note of any warranties or guarantees. Get to know your representatives to foster a good B2B relationship. A representative or support team with set communication procedures goes a long way!
- Customer Service
Once again—your customers will want prompt answers. Even though drop-shipping suppliers are responsible for the products, customers will come to you for concerns and complaints. The best way to address this communication! You want a communicative supplier so you can easily pass along information to the customer. Avoid further delays in updating customers by establishing procedures for shipping issues, returns/exchanges, etc. Have information readily available for customers and your team. You'll thank yourself later!
- Competition
If you’re researching drop-shipping, this probably isn’t the first time you’ve heard of it. That means many other businesses are taking advantage of this model. You may experience varying amounts of competition depending on your industry. Standing out will take additional effort. You could differentiate your business by offering unique customer benefits, selling complementary products as a bundle, engaging customers with a fun marketing campaign, etc.
What’s the main takeaway? Drop-shipping can be a viable strategy for selling commercial-grade table bases, offering cost savings and flexibility. However, it also comes with challenges, such as lower profit margins and potential issues with supplier reliability. The decision to drop-ship should be based on your specific business goals and circumstances.
If the pros outweigh the cons, your next decision is to choose the best drop-shipper for your industry.
For example, JI Bases could be a good fit if you sell, distribute, or design with table bases. Whether shipping to you or your end-customers, JI Bases ships your order where and when you need it. Approximately 75% of all orders we fulfill are drop-ships! We can ship it out within the next 24 business hours or schedule a later delivery for advance orders. You can deliver directly to the end customer, your warehouse, your storefront—wherever you need! If you need an extra table or two, no worries—our flexible order policy doesn’t require a minimum quantity. Almost 70% of our orders are for less than $500! At JI Bases, we offer a range of customer benefits that help you get what you need when you need it. What’s better than that?
