Disadvantages and Risks of Dropshipping

December 4, 2010 by

Dropshipping can be a convenient way for retailers to sell products without having to store them or arrange deliveries, but there are also a number of disadvantages involved in using a dropshipper.

Many of these disadvantages relate to the loss of control that is inherent when some responsibilities are handed over to a dropshipper. The retailer must rely on their dropshipper to provide good quality products, to package them safely and to deliver them quickly to the customer who has paid for them. Since the dropshipper will be taking on so many of the responsibilities that would usually rest with the retailer, it is vital for the retailer to ensure that they are working with a reliable dropshipper.

Another disadvantage of using a dropshipper is that, although the dropshipper will be handling the goods and the deliveries, it will be the retailer who must deal with the customers. Providing customer support can be difficult when the retailer is not handling the items themselves. The retailer may need to answer questions about products which they do not have before them. It may be necessary for the retailer to contact their dropshipper to ask them about the product before they can offer an answer to the customer. The retailer will also have to deal with any complaints from customers, even about aspects of the sale for which they are not directly responsible. If an item is not delivered on time, it will be the retailer who will be contacted by the customer even though it is the dropshipper who handled the delivery.

The retailer will also have to consider the returns policy set by the dropshipper, which may not be in line with the retailers own usual policy. The retailer must go along with whatever policy the dropshipper has decided upon, or risk losing money if they agree to refund customers without receiving a refund from the dropshipper.

Not having to manage an inventory can be a useful time saving benefit of dropshipping, but the fact that the retailer does not handle the inventory can also be a disadvantage. If the dropshipper does not organize their inventory well and communicate with the retailer, then it is possible that the retailer may sell an item that the dropshipper no longer has in stock.

In addition to the disadvantages related to the loss of control which occurs when using a dropshipper, there may also be disadvantages relating to the cost of the items. Some dropshippers offer excellent value for money, but others may overprice the items that they sell or charge large handling fees that means retailers cannot make reasonable profits.

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