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Advantages and disadvantages of dropshipping


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Many traders believe dropshipping is an absolute godsend in saving time, your own resources, and cost.
The quick answer is yes it can do these things BUT there are potential downfalls you need to be aware of.

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Advantages and disadvantages of dropshipping

  1. 1. Advantages  and   Many  traders  believe  drop-­‐shipping  is   an  absolute  godsend  in  saving  5me,   your  own  resources,  and  cost.  disadvantages  of       The  quick  answer  is  yes  it  can  do  dropshipping  in   these  things  BUT  there  are  poten5al   downfalls  you  need  to  be  aware  of.    Australia   1  
  2. 2. What  is  dropshipping?   1   In  essence,  you  as  the  retailer  can  avoid  keeping  stock  and  pass  over  the  customer  order  as   well  as  the  shipping  details  to  your  supplier  who  ships  the  goods  to  your  customer,  on  your   behalf.   Advantages   2   The  two  significant  advantages  are  the  elimina5on  of  retaining  inventory  and  since  you  as   the  retailer  are  paid  immediately  on  sale  AND  (usually)  pay  your  supplier  on  credit  card  or   credit  terms,  you  fall  into  a  posi5ve  cash-­‐flow  posi5on.       You’ll  find  you’re  elimina5ng  duplica5on  of  a  number  of  inventory  efforts  such  as  picking,   packing  and  shipping  the  ordered  item  -­‐  with  drop-­‐shipping,  this  only  needs  to  be  done   once  and  by  your  supplier.  ©  Hong  Kong  Limited  –  Advantages  and  disadvantages  of  dropshipping   2    
  3. 3. Disadvantages   3   Since  you  can’t  be  100%  certain  your  supplier  has  sufficient  stock  to  fulfil  your  customer   order,  there’s  a  likelihood  of  back  ordering  taking  place  which,  obviously,  could  affect   shipment  expecta5ons  and  therefore,  your  on-­‐line  reputa5on.   There’s  been  some  historic  evidence  with  the  promo5on  of  drop-­‐shipping  being  used  by  scam   ar5sts.  I’d  refer  you  to  our  previous  ar5cle  on  ‘ Five  Ways  for  Australians  to  Avoid  Scammers  Online’  as  a  good  star5ng  point  in  avoiding   bogus  drop-­‐shipping  schemes.   Further  to  this,  you  also  need  to  understand  the  supplier  you’re  dealing  with.  There  are  a  few   drop-­‐shipping  suppliers  who  are  actually  just  middlemen  in  the  supply  chain  I.e.  they  are  just   a  shopfront  for  many  true  drop-­‐shippers.     Check  out  their  background  and  opinions  from  other  traders.  We’ve  got  some  extra  5ps  on   this  in  ‘Finding  The  Right  Supplier’.   Please  do  check  out  these  free  resources  and  let  us  know  any  other  tools  you’re  using  or  would  like  to  see  on       As  always,  we’re  here  to  help  you  with  your  online  sourcing  and  trading  as  much  as  we  can,  so  if  you  have  a  question  just  ask.   About  (HKSE:  1688.HK)  is  the  global  leader  in  e-­‐commerce  for  small  businesses  and  the  flagship  company  of  Alibaba  Group.  Founded  in     1999,  makes  it  easy  for  millions  of  buyers  and  suppliers  around  the  world  to  do  business  online.      ©  Hong  Kong  Limited  –  Advantages  and  disadvantages  of  dropshipping   3    
  4. 4. Alibaba  Australia’s  Social  Media  Channels   Facebook:  Facebook  has  over  10  million  ac5ve  Australian  users  per  month  so  becoming  an  ac5ve  par5cipant  with  the  Alibaba  Facebook  Page  will   have  benefits  for  any  proac5ve  business. The  Alibaba  Facebook  Page  boasts  instant  downloads  of  the  Business  Starter  Kit  for  sourcing  products  and  finding  quality  suppliers.  You’re  able  to   view  videos,  Alibaba  Upcoming  Events,  member  tes5monials  and  exclusive  promo5ons  and  event  invites. LinkedIn:  The  LinkedIn  Alibaba  Group  will  connect  like-­‐minded  members,  provide  a  new  stream  of  poten5al  suppliers  and  foster  stronger  rela5onships   with  exis5ng  members.  The  Group  allows  members  to  expand  into  their  professional  LinkedIn  network,  using  an  already  trusted  global  brand. TwiCer:  Get  fast  and  instant  facts  from  Alibaba,  by  following  our  Twicer  profile  alibaba_aus We’ll  be  ‘twee5ng’  our  own  flavour  of  AliFacts  with  useful  and  helpful  reminders  for  your  Australian  on-­‐line  experience  in  buying  and  supplying. Here’s  a  recent  ‘tweet’  highligh5ng  what  a  local  Adelaide  business  is  doing:  “An  Adelaide  hair  salon  is  using  to  grow  its  business  &   help  cancer  pa7ents  look  &  feel  their  best  h:p://“ YouTube:  The  Alibaba  Australia  YouTube  Video  Channel  is  a  growing  member  showcase  of  success  stories  and  tes5monials.  To  get  a  taste  of  the  sort  of   member  stories  you  could  also  be  a  part  of,  check  out  THIS  VIDEO.   Par5cipa5ng  allows  for  expanding  your  market  reach  and  to  tell  the  world  about  your  products  and  services. Alibaba  Blog:  The  Alibaba  AU  Blog  provides  5ps  for  the  online  trading  beginner,  seing  up  a  successful  online  business,  advice  in  finding  the  right   products  from  the  right  suppliers  for  your  business  and  informa5on  on  how  best  to  op5mise  your  product  line  and  process. Access  the  latest  trends  and  products  in  Australia’s  online  trading  industry  by  subscribing  to  the  blog.  Join  Together  For  Greater  SuccessAlibaba  is  firmly  dedicated  to  rapid  growth  within  the  Australian  market  and,  more  importantly,  our  partnerships  with  Australian  members.Like  any  strong  and  long-­‐term  business  rela5onship,  your  success  is  our  success.  Please  do  check  through  each  of  the  Alibaba  Social  Channels  we  have  put  together  and  join  those  that  align  to  your  business  and  personal  objec5ves.  Can  We  Spread  Your  Word  Too?If  you  have  a  successful  sourcing  /  business  story  to  tell,  we  would  love  to  hear  from  you  via  our  Social  Media  Channels.We  like  to  promote  success  stories  via  Tes5monials,  Press  Releases  and  in  general,  our  Social  Media  Channels  –  please  do  let  us  know  your  story. ©  Hong  Kong  Limited  –  Advantages  and  disadvantages  of  dropshipping   4