Dropshipping is a business where you sell other people’s products online via your online store and get paid commissions for every sale you make. Dropshipping seems like easy money since you don’t have to stock the product or fund the deliveries. Unlike affiliate marketing which is often confused with dropshipping, you’ll need to set up a website, run promotions and handle customer service.
While this is true it is not as easy as people make it look. Dropshipping like every other business has its uncertainty and revenue constraints.
Let’s look at some of the hard truths no one tells you about dropshipping.
1. Low Profitability
Dropshipping requires little startup capital, and this means you also make low profits. The commissions from your dropshipping business will most like be unable to cover your expenses for marketing, maintaining your website, managing sales orders and covering your office hours. Having more suppliers can help cushion this challenge, but it also means you’ll have to invest some more.
2. High Competition
You might be attracted to the low barrier to entry that comes with dropshipping, but that is one of the major problems with this business. You’ve got a lot of people competing to sell the same product making it more difficult for your business to scale. This is even worse when you’ve got no exclusive products from your suppliers.
3. Legal issues.
As a dropshipper, you don’t always know where your products come from and sometimes you could be dealing with illicit suppliers. This creates the possibility of getting entangled in a legal battle that you didn’t start in the first place. Some vendors are not as legitimate as they claim. An even more risky case is with suppliers who use trademarked logos or other brand’s intellectual property.
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