Dropshipping: advantages, disadvantages

Dropshipping is a retail method in which the seller (dropshipper) does not keep products in stock. The order details and buyer information are passed on to a third party — the supplier (manufacturer, wholesaler, or another retailer).

Dropshipping: Pros and cons, who this model suits

This model can be implemented in various ways. Sellers often work with Chinese suppliers who ship products from their own warehouses. There is also local dropshipping, for example, for the USA. Sellers list the product on Amazon with their markup, and after an order is placed, the manufacturer ships it. This way, both the supplier and the dropshipper earn money.

Pros of dropshipping

They include:

• Low startup capital. You can start selling with just $100.
• You don't need to pre-purchase or store inventory.
• The dropshipper doesn't handle packaging or shipping.
• Essentially, the business only handles marketing and customer communication.

Cons of dropshipping

Main disadvantages:

• Low markup. You can only compete with a small profit margin.
• You cannot assess the quality of the products you're selling blindly.
• No control over delivery time.
• Violating promised conditions leads to negative reviews, which will flood your account. A damaged reputation is hard to fix and will hinder customer acquisition.
• The strategy requires uploading a large number of products at once — thousands of items to make a profit. Successful sales need unique product descriptions with photos.
• You must handle all negotiations daily (buyer-seller, seller-manufacturer), which takes time and knowledge.
• Manufacturers don’t want to be a middleman when they can sell directly to the end customer.
• High risk.

Before starting, it's important to assess the pros and cons of dropshipping. And of course, find a very reliable supplier.

Who is dropshipping for

It is an ideal model for:

• beginner entrepreneurs with low startup capital and minimal trade experience;
• those who want to test a niche/product — allows you to check demand without large purchases;
• people focused on marketing, who want to attract customers instead of handling logistics;
• those who want to work remotely without being tied to a warehouse or office.

Keep in mind a key detail when working with marketplaces. You can do dropshipping on Amazon, but only if you are the primary seller listed on the packaging or in the documents. According to platform rules, your business is responsible for handling returns.

The model where you buy a product from another retail site (e.g., eBay or an online store) after receiving an Amazon order and ship it directly to the customer is strictly prohibited. Your account will be suspended for that.

Dropshipping is considered a good entry model. But businesses must find reliable manufacturers, manage sales, and handle delivery time issues.

Conclusions and recommendations: Dropshipping — what’s next?

Transitioning from dropshipping is a natural stage of growth if you want to build a serious and profitable business. Consider the following directions:

• Hybrid model. Start with wholesale purchases of products that sold well via dropshipping. Use dropshipping only for testing new categories or niches.
• Wholesale purchases from the supplier, but selling from your own warehouse. You'll get lower prices, significantly increasing your profit margin plus better control over stock and delivery.
• Own brand. You don’t need to build manufacturing from scratch. Chinese factories produce products according to your technologies and designs. This way you create a unique product/brand that is harder to copy and increases customer loyalty.

Contact DiFFreight — we offer reliable logistics solutions, warehousing services, product delivery from Ukraine to the USA, and support at every stage of your business journey.