[PL] Dropshipping in e-commerce. Advantages and challenges of this business model

In today’s dynamic world of e-commerce, entrepreneurs are constantly looking for innovative and efficient business models. One logistics solution that significantly facilitates the running of e-shops, especially for smaller players, is dropshipping. What exactly does it consist of and what advantages does it offer? When is it worth using?

What is dropshipping?

Dropshipping is an e-commerce business model in which the seller does not physically store the products on offer, but transfers orders and delivery information directly to the supplier or manufacturer. In practice, this means that the trader does not have to maintain a warehouse or incur storage costswhich is the key difference between traditional trading methods and the dropshipping model. Nor do you need to handle the packaging, or even know the e-commerce packaging rules.

Creating your own e-commerce business based on dropshipping does not require a large amount of capital to start with. It is therefore a good choice for people who are just taking their first steps into the world of e-commerce.

Importantly, there are often doubts as to whether the stored goods in this model can be sent outside the country. Dropshipping abroad is absolutely possible and is one of the advantages of this business model. Indeed, with the global growth of e-commerce, opportunities to work with suppliers and customer service around the world are becoming increasingly available.

Dropshipping in e-commerce: advantages

Dropshipping in e-commerce has numerous advantages that young entrepreneurs in particular will appreciate. What do they include?

Low cost of entry – dropshipping is attractive to new entrepreneurs because it does not require a large initial capital for purchasing and storing inventory. The lack of need to invest in a warehouse allows e-commerce businesses to get off the ground quickly.
Flexibility and expansion – with dropshipping, entrepreneurs can test different products without the risks associated with holding large quantities of stock. This flexibility allows them to adapt their offerings to changing customer preferences and market trends.
Focus on sales and marketing – not having to manage the warehouse and logistics allows entrepreneurs to focus on other activities, especially sales, marketing and customer service.
No warehousing commitments – in traditional retail, a shop has to buy in bulk and hold stock, which generates costs and commitments. Dropshipping avoids this risk.
Global trading opportunities – online e-commerce platforms make it easy to establish partnerships with suppliers in different regions, which opens the door to international sales.
Multi-vendor opportunities – entrepreneurs can work with a variety of suppliers, tailoring their offerings to the needs of the market.

Challenges generated by dropshipping

Like any business model, dropshipping generates some challenges. These may be perceived by some as disadvantages of this solution.

Lack of control over delivery and inventory – some delivery and product quality issues may be out of the retailer’s control.
Low profit margins – due to the competitiveness of the dropshipping market, profit margins can be low.
Quality issues – some deliveries may be delayed or the product may not meet customer expectations, affecting the shop’s reputation.
Risk of increased competition – the popularity of dropshipping leads to increased competition, which can make it difficult to succeed in a particular industry.

When is it a good idea to opt for dropshipping?

Dropshipping is an excellent business model for start-up entrepreneurs. The minimal cost of entry allows you to get your online shop up and running quickly without having to invest in large amounts of inventory. It is also a good choice for companies that want to react quickly to changing market trends. Thanks to the lack of stock commitments, companies can adapt their offerings to the current needs of consumers.

Entrepreneurs who want to enter international markets with their business should also consider dropshipping. The growth of e-commerce is making global sales increasingly accessible and competitive.

What are the alternatives to dropshipping?

The main alternatives to dropshipping are own warehouse or fulfilment. While own warehouse provides greater control over the quantity, quality and availability of goods and lower unit costs through bulk purchasing, it carries the risk of over-stocking and a decrease in the value of goods. The responsibility of packaging remains with the retailer. So if you decide to go for this solution, please also read our article: What to pack parcels for parcel machines?

Companies offering fulfilment services, on the other hand, handle the storage, packaging and dispatch of the goods on behalf of the online shop. This means, therefore, that the shop can still control the quality of the goods, but does not have to deal with the physical management of the warehouse.

The choice between dropshipping, in-house warehouse and fulfilment services depends on a number of factors, such as the type of products, the scale of the operation, control over deliveries and the entrepreneur’s preferences. Each of these options has its advantages and disadvantages, and the decision should be tailored to the specific needs and business strategy.