Dropshipping vs. warehouse shipping
With so many options for fulfilling your orders, how do you know what is right for your business? Today, we’ll take a look into the two most popular ways of shipping your products – dropshipping and warehouse shipping. But before we begin, let’s first understand what dropshipping really is.
Dropshipping is a fulfillment method that allows a business to take orders before owning the inventory. Instead of storing the inventory in a warehouse, they partner with a third party – usually a wholesaler, manufacturer or distributor – to fulfill orders directly to their customers. In a nutshell, they only buy the products once they have an order for them, then the supplier ships the product directly to the customer.
You can read more about dropshipping here.
What about the other way – warehouse shipping?
Warehouse shipping is the classic model of retail fulfillment. You purchase the product from a distributor or manufacturer, store it in your warehouse or third-party location, and ship to your customer when you receive an order. Simple.
Which one is better for me? First, let’s take a look at the pros of dropshipping.
No Inventory: Because you do not buy the inventory until you have sold the product, you won’t be stuck with inventory that doesn’t sell.
Low Overhead: By dropshipping, you eliminate the need for a warehouse and the expense of carrying inventory for all your listings. Also, you do not need as many employees and equipment. It’s much. Much cheaper to start dropshipping.
More Efficient: Dropshipping creates a streamlined process for you and your customer. The product goes directly from the manufacturer or distributor to your customer and eliminates the extra steps of your business receiving, storing, and shipping the product.
What are the pros of warehouse shipping?
Firstly, you own the inventory. This means that you know which products you have in stock and how many you have.
Also, unlike dropshipping, you don’t have to play middleman to correct shipping errors. You have the ability to resolve issues on the spot instead of relying on your dropshipper.
You also do not rely on any third-party distributors to ship the item. The item is in your warehouse, and once you get the order from a client, you just send it out – simple. Another issue with dropshipping is that you don’t own the inventory, and as such, you have to rely on the dropshipping provider to provide accurate timelines and thorough work.
Which one would we recommend?
Well, it depends. If you have a lot of money to invest, then going with the traditional route of warehouse shipping is great. Get (or rent) a warehouse, some equipment, purchase some products and store them in your warehouse. And as soon as you start receiving orders you can ship them straight away.
If you don’t have a large overhead, dropshipping is the way to go. The ability to have an endless aisle, with no inventory risk, low costs, and a streamlined supply chain that quickly ships products to your customers is also pretty great.