Dropship vs Carrying Stock.

[i234i]

Hi folks, Just wanted to pick your brains over the Pros and Cons of drop shipping to start off over carrying loads of stock.

I have the website ready to go and deciding which way to go, Drop shipping gives a much larger range of stock with no overheads to start off with, but obviously higher postage costs and no control over items being sent and how they are sent.

My drop shipper would be my wholesaler which i have used for another part of my business, but they are based overseas.

They are $5 flat postage, free for orders over $25 which is alright.

The product is good and i've tested the drop shipping myself with them for various items, obviously the cost base is higher for Drop shipping.

Its a real 50/50 on alot of areas, just wanted to see what your experience is etc.

I'm sure one of the guys here does Pet Supplies started in a similar way and moved over to full wholesale and now a unit with trade option.


Thanks, Mark

 

[JMRidley]

We do about 50/50. What I like about dealing with orders for items we hold in stock is: We know it's in stock!, we can apply our own standard to the packaging and inserts etc., we can see what we are selling so can usually describe it better (we have seen most of the drop ship stock but only at trade shows so probably aren't as familiar with this as the stock we hold, our margins are better generally. What I like about using dropship: we can put a lot more items on our site than we could hold in stock, we're not shipping larger items twice (once to us, once to customer) so probably more environmentally friendly, we can try something out before we decide to stock to see if it is right for our customers. Whether or not dropshipping works is highly dependent on the companies you are using. We have 3 absolutely excellent companies that we deal with who process orders really quickly, keep us up to date about their stock levels, deal really well with queries and returns and clearly care about customer service as much as we do. All three companies are the ones who make their products (i.e. they are not wholesalers) so they have a real interest in providing a great service as it clearly reflects on their brand. I'm not sure that I would dropship from a company that was purely a distributor of other peoples products.

 

[i234i]

That was exactly my thoughts aswell! Stock the main items, and work my way back the more capital i got by reinvesting in it. There are around 10 different sizes for each item and also 10 variations of each item, so its a huge outlay.

For us each item sells £3-6 usually and normally people spend around £10 per order, which would push up for us to do the free delivery from the dropshipper.

I guess there really is only one way to find out, i think i'll put through a few other test orders as drop ship to see how they go aswell!

 

[-Joe-]

Dropshipping's good to bulk up your catalogue - even if you only have the funds for 5 products, dropshipping can let you stock 5000!

 

[JMRidley]

I sort of agree about being able to bulk up your catalogue but I'm not sure it is as simple as that. For a start you need to load and maintain all the products you put on your site. If you get regular stock updates from your supplier that could be a lot of work. And if you don't get regular stock updates your customer services/ratings will really suffer if people regularly order things which turn out to be out of stock.

Also, you need to avoid your site looking like a mish mash of all sorts. We only put products on the site which we think fit with our brand regarding quality, product ranges etc. I do go on some sites and wonder what they are actually about because they have such a bizarre, unrelated range of stuff.

 

[i234i]

yeh defineatly agree with that! I hate the sites you can tell are bought off ebay as drop shipper setup web shops haha!!

It's a very wide product range, but its all basically parts for one industry! ie: Parts for Cars. and not Plumbing and then Hair Accessories.

JM - Did you ask for samples of each product or anything before you started off?? or how did you work out what was good quality etc from them. I have bought from them as i say as a wholesaler for select products but you dont get very far when 10 sizes and 10 variations of each and all are set to regulations as its a strict industry.

 

[SillyJokes]

Drop shipping good to start with but ultimately not only are you getting a ready made catalogue of goods, you are getting a ready made bunch of competitors who also drop ship with that company and are already 5 years ahead of you.

You can't beat the stock control and customer service that you get with running your own warehouse properly.

 

[i234i]

Thanks Silly!

Do you have any advice on starting with Drop shipping and moving over to more Wholesale sent direct from yourself? Gradual from day one? or at a certain point etc?

 

[JMRidley]

Burden, We saw all of the products that we stock at trade fairs so we were fairly sure about the quality of what we were getting.

 

[i234i]

Ah brilliant thanks!! I'm considering visiting them to see the products we don't usually use, but its oversea so i'm just trying to link up with going there to try kill 2 with the one stone.

 

[i234i]

ah cool thanks

 

[gemd89]

Another problem - you could put 500 items on your website and then have orders through - have you checked the supplier to make sure they still have those 500 items in stock, obviously they can run out aswell? So you wont be able to check this all the time. Im all for gradually building stock and dropshipping when something different is ordered but i wouldnt do dropship - i like to be in control and know what i physically have rather than relying on a supplier to keep me up to date on whats sold out and whats new in

Gemma

 

[SillyJokes]

Burden,

A big problem of moving from drop shipping with a distributor to own warehousing on an ecommerce site is that if you have used all the images and text supplied by the drop shipper but decide to go it alone, buying from their competitors, they will probably ask you to take it all down with immediate effect.

If you have created your own images and text from the start you can just switch to which ever supplier can give you that same product at the best price. It's a lot more work but in the long term it frees you from the drop shipper. If you use all the material supplied by them you are tied in and must pay their prices and it will be very hard to start to warehouse yourself.