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The Disadvantages of Dropshipping

Ryan Culver
Mar 27, 2018 9:56:14 AM

After a brand decides to take its Amazon strategy to the next level, it’s time to optimize the fulfillment and distribution process. While the buying process on Amazon is remarkably efficient and customer-friendly, what comes next can be confusing and time consuming for both the buyer and the seller.

Let’s take a look at dropshipping. This happens when a brand is actively running its seller account on an online e-commerce platform, but it contracts out fulfillment services to a third party. While this takes the hassle out of the initial order distribution, it can create confusion and uncertainty down the road. Below, we’ll look at some of the disadvantages of dropshipping and share how brands can find other ways to optimize fulfillment operations.

Customer Service Issues

While dropshipping sounds like a convenient operation up front, having two different teams responsible for separate parts of the fulfillment processes can mean customer confusion down the road. If a customer receives a damaged package, for example, they would likely take their issue to the seller, even though the seller didn’t actually ship the product. This means that the seller can’t answer all of the questions a customer may have, causing the customer to lose faith in the seller and have yet another conversation with a different service rep.  

Diminishing Profit Margins

Dropshipping offers a complicated situation when it comes to saving and spending money. On one hand, brands can save money by not packaging and shipping the orders themselves. On the other hand, however, brands miss out on fulfillment deals and discounts that could help to improve profit margins. Adding to the costs, dropshipping companies tend to charge per-item prices instead of in bulk, which can really add up for brands.

Decreased Seller Rating

With another party handling distribution and fulfillment, brands can miss out on a critical part of the Amazon seller relationshipthe seller ratings. Brands leveraging dropshipping have zero control over how or when packages arrive, and they can’t add personal touches like thank you notes or branded containers. Instead, brands have to rely solely on their dropshipping partners, which can negatively impact seller feedback and ratings from consumers.

Lack of Visibility into Product Supply

When a brand is actively selling a product, but a separate party is fulfilling the orders, there are often miscommunications over the status of supply and demand. This can easily lead to slip-ups in the fulfillment process and can even lead to empty warehouses. A brand and its dropshipping partners must be in constant lockstep on where units stand, whether they’re in warehouses, returned to a physical store, or are in transit.

Never Worry About Dropshipping Again

At the end of the day, leveraging a dropshipping relationship to optimize fulfillment operations can be more trouble than it is worth. Working with a dedicated sales partner takes dropshipping out of the equation entirely. The team at SupplyKick manages both the selling and fulfillment operations so your team just has to work on developing amazing products. Get started today.