When considering the model, the immediate benefits for all parties are obvious. We've already described the advantages for the online retailer above. The advantage for the end customer is that they receive their ordered goods quickly because there's no need for shipping. For wholesalers, dropshipping naturally offers another sales channel. The number of online shops is virtually endless.
Nevertheless, risks or disadvantages should not go unmentioned.
1. No savings on the purchase price
Let's assume two retailers purchase the same product from the norway cell phone number list same wholesaler for a total value of EUR 50,000. The retailer with its own inventory can certainly negotiate favorable terms with the wholesaler due to the high volumes. The dropshipping retailer essentially purchases individual products on demand. Although both retailers generate the same sales from the wholesaler over a certain period of time, the quantities and thus the individual prices will differ due to the different purchase prices.
2. Returns
Of course, the issue of returns affects both online retailers with their own warehouse and those with dropshipping. However, the dropshipper must determine where the goods should be sent as part of the return process. Should they be sent back to the wholesaler or directly to the online retailer? While the online retailer with warehouse management has already purchased the goods and accounted for the associated costs, the dropshipper wanted to refinance the goods through resale. However, the end customer has not yet paid. The goods still have to be accepted from the wholesaler.