In Drop-shipping a store doesn’t keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer. As a result, the merchant never handles the product.
However, contrary to popular belief, drop-shipping is far from easy.
Here is why
1. Low profit margins.
For every sale you make, most of the money goes to the supplier. What you earn is just a very small fraction. This means that you have to do a lot of business just to stay afloat.
2. Highly competitive.
Because very little capital is required to start a drop-shipping business, that low barrier to entry means a lot of competition.
However, drop-shipping isn’t all bad. While its very difficult to build a business using dropshipping alone, it can be a great addition to a regular retail business. For example, you can use it to try out a new product. Instead of stocking an unpredictable item, you can test it out with a trial period using drop-shipping.