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Selling on Amazon comes with overheads. The basic functions of storing and fulfilling customer orders make up a significant part of a seller’s costs. Dropshipping outsources these and other functions to third parties, such as suppliers, that would handle the production, storage, and fulfillment for you.
Usually, it’s not a great option for sellers trying to differentiate themselves and establish a brand name with wider margins, but if you are selling generic products where you compete on price, dropshipping can shave off your outgoings.
The customer experience will be largely the same. They will make an order, the seller will receive it, and then, once confirmed, the order will be forwarded onto the dropshipper, who will then deliver it to the customer.
Who your dropshipper is can also depend on who your customer is. Some product manufacturers offer dropshipping services and can serve both retailers and direct customers, though they may require bulk purchases that make it difficult to start or grow a business at scale.
Similarly, some wholesalers also offer dropshipping services, but only to retailers.
Some dropshipping deals allow you to have control over the customer service and marketing aspect of the business while the dropshipper will take care of the actual delivery and handling
Several things need to be taken into consideration when deciding whether to use a dropshipper or to do it yourself
Pros:
Cons:
Whether or not you go the dropshipping route will depend a lot on what kind of business you want to build, and what level you want to compete at. If your strategy is to be a low-margin, high-volume seller then it would be a good option, or if you wanted to have a boost to start-up and gain revenue traction before making your brand more robust through other avenues like FBA.
If, on the other hand, you want to put your mark on the products and carve a niche out for your brand, you would be better off looking for fulfillment options where you have more oversight and more options to create a connection with your customers.
A few best practices to keep in mind when you set up a dropshipping operation:
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