The internet has significantly changed the mode of doing business. These days, you do not need a brick and mortar store or a warehouse to operate a business. You just need your computer and internet connection. Your work is to find clients, sell the items that you do not own, then find the items from a suitable manufacturer and have them ship the products to your clients. You will not even handle those products. If this sounds like something you would like to do, and quit your boring nine to five job, then Verum Ecom is the place to learn all you need to know to kick start your business. As part of the larger eCommerce, here is how dropshipping affects this concept.
Increased Number of Merchants
At the inception of eCommerce, buyers had a direct relationship with manufacturers or retailers. The two operated in the traditional sense of buying and selling, where one would have a physical store and ship the goods to clients once they are paid for. With drop shipping, sellers do not need to have any physical store. This scenario creates an opportunity for a lot of traders to venture into the business since no inventory is required. They also require very small capital to get the business running. This situation has immensely increased the number of traders online.
Increased Possibility of Fraud
As the number of sellers increases, so do the number of fraud cases. Not every seller is genuine. Some have fake websites where unsuspecting buyers place orders, pay and they never get to receive their wares. It is very difficult to identify genuine from non-genuine sellers, so you just have to rely on your guts or use references. An increase in fraudsters will impact eCommerce negatively. In addition to fraudsters, there will be instances of buyers receiving low-quality products. Considering that sellers never see or handle inventory, they do not have control over what their customers receive. That is left at the sole discretion of the manufacturer, hence this possibility.
Reduced Cost of Business
Despite the fraud challenge, drop shopping is still a viable eCommerce business if you consider the cost of business. For once, there is no liability for stocking inventory, so need of having warehouses. Keeping and managing inventory is one of the challenges of doing business and contributes to immense costs. With drop shipping, this cost is eliminated hence reducing the cost of operations. Sellers simply provide the manufacturers with shipping address and have the products shipped to the clients directly from the factory.
Allows Easy Scaling
It is easy for well-established dropshipping businesses to scale up. You just need to increase the number of clients, hence the number of orders, and order more from your suppliers. With no added costs of intermediaries such as banks, storage, shipments and other business infrastructure requirements, it becomes easy to some extent to scale up a dropshipping business. This development has a positive impact on eCommerce overall. The model leads to a reduced cost of goods and is quite lucrative when done right.