Dropshipping cons that you need to know

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DROPSHIPPING CONS THAT EVERY RETAILER SHOULD BE
AWARE OF

• Dropshipping is at the notch these days, thanks
  to the proliferation of the internet and the
  accessibility of online stores.
• Many retailers/ online sellers tout dropshipping
  for its ease and the benefits it carries- In a
  small drop of Investment, retailers can gain a
  huge amount of profit.
• Even, the pains to load inventory and dispatching
  merchandise at the customers doorstep is upon
  dropshippers.
• But Why not, this business model considered to be
  the best option?
• Here in nexts slides there are some drawbacks of
  Dropshipping...

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Fraudulent Dropshippers

• The cases of drop shipping fraud are increasing
  day by day because of the vast competition.
• Retailers have to be on their toes to study the
  profile of a dropshipper before taking a big step
  i.e. About Company, Reviews, Market Goodwill,
  etc
• On the contrary, manufacturers or wholesalers
  whom retailers approach might not respond to
  their requests as they consider retailers not
  serious and dont wish to handle their inventory.
• This reason can change the positive approach to
  negative and manufacturers may drop the request
  stating it not to be worth time investing.

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Processing merchandise is not easy

• Many retailers who work with multiple
  dropshipping companies might follow a different
  set of rules for order processing, billing and
  shipping if the companies carry different rules
  for their processes. This makes the retailers
  task cumbersome.
• The gap between taking an order and processing it
  to ship can stretch the shipping hours, as a
  series of conversation and action takes place
  before the product is sent off to the
  destination.

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Niche Product line

• Few retailers are cemented to a single product
  selling, so if a customer does not find better
  product line at one store, they easily switch to
  the stores which serve customers with vast
  options of brands and products. This results in
  losing those unreached customers who love to shop
  for various brands and products.
• Retailers suffer this situation if they are
  associated with a dropshipper who procures
  inventory of a single product line.
• For instance A potential user browses for
  designer watches on your website and refines the
  search to see options of a specific brand. If the
  visitor doesnt see multiple designers and
  styles, this would compel them to leave the site
  and search for a competitors site. This clearly
  can be a huge loss to single brand stores.

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Half-filled glass of information and quality
assurance

• This is the second most important drawback for
  which a retailer has to worry about.
• Retailers have basic information to provide and
  are even not sure about the product quality.
• They carry only a catalogue with a descriptive
  information including prices to display in their
  online stores, everything else is managed and
  processed by the dropshipper.

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Order Tracking

• After passing the customers order to the
  dropshipper, the retailer has to constantly
  coordinate with the dropshipper to track the
  status of the order and time it will take to ship
  the consignment at the customers doorstep.
• The constant updates via mails,messages or calls
  consumes precious working hours and disturbs the
  process of both the parties.

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Thin Margin line

• This is the reason for not choosing dropshipping
  as the sales strategy.
• The difference between the marked price and
  charged price is the profit which a retailer
  actually earns.
• The profit is moderate and a retailer hardly
  earns 2-5 per product. Even if, the products
  which a seller is selling are expensive and
  unique, they cannot determine the margin of the
  selling price.

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Customer Service

• For a customer, a retailer is responsible for his
  business and not the dropshipper. He does not
  even know what sales strategy a retailer follows
  to complete the selling process and as he is only
  concerned about the product and quality.
• Therefore, for a loss or damage or product
  enquiry, a customer will rely on a retailer for
  an immediate response which is difficult in this
  case.
• Aftermath, a late or disappointing solution can
  ruin the business image.

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Goods Returns

• Standard Quality is what makes a customer walks
  hundreds of stores
• If the consignment shipped is of inferior
  quality, customer will not accept and immediately
  return at companys address. Aftermath, a late or
  disappointing solution can ruin the business
  image.
• Knowingly or unknowingly, a retailer has to bear
  the loss of defective shipped goods though, he
  has not fulfilled it.

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Stock Synchronization

• Once the order is picked and packed to the
  destination, the stock level needs to be updated
  with both the parties- the retailer and the
  dropshipper.
• The dropshipper has to notify in advance about
  the stock level to escape from out of stock
  issues otherwise, the last minute call of the
  stock issue can either double the expense of
  shipping or the retailer might lose a valuable
  customer.

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Competition level is High

• To stand alone in the busy crowd, a retailer has
  to think for unique opportunities rather than
  following the same line and downline the sales
  graph.
• As competition is high, dropshippers have a
  tendency to charge more from the retailers and
  the retailers struggle with moderate rates though
  their selling price is high.
• With the same business line, a fear of being
  swallowed by the competitors resist the temper of
  the retailer to go either for the unique
  opportunities or set exclusive policies for the
  customers.

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Wrapping Up

• Though, dropshipping carries a set of
  disadvantages, its the best option for the
  online retailers who look for a better approach
  to expand their business or want to start from
  scratch.
• And, some of the drawbacks can be addressed
  easily if the process of dropshipping is
  streamlined using a suitable dropshipping
  management software.

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About Orderhive

• Orderhive, the leading Inventory Management
  Software is packed with powerful features and
  dropshipping is one of them. Using this software,
  retailers can overcome a few dropshipping
  drawbacks like Order Tracking, Customer Service,
  Inventory synchronization,etc and make the
  process hassle-free.
• Orderhive Features
• Order Management
• Shipping Management Shipment Tracking
• Dropshipping Management
• Online purchase management
• And more... Take a look http//www.orderhive.com
  /features.html

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Content Credits

• The content is originally published on Orderhive
  WordPress Blog.
• The credit goes to this article post
• https//orderhive.wordpress.com/2016/04/30/dropshi
  pping-cons-every-retailer-should-be-aware-of/
• Thank you.