Logistics is a vital part of global e-commerce business, unsuitable e-commerce logistics solutions not only cost the business owner a lot of money and time, but also affect the customer satisfaction. For the e-commerce starters with very limited budget, low-cost and effective logistics solution becomes particularly important. When it comes to low budget logistics, a lot of people may think of drop-shipping at once, in fact the dedicated order fulfillment service by ChinaDivision can be very affordable as well. You can list the pros and cons of them to help you make a better decision.
Drop-shipping
Pros.
– Beginner friendly. Anyone can get involved in the e-commerce field with the help of drop-shipping, it seems such a low hanging fruit.
– No inventory budget. If your products are sourced from China. The e-commerce store owner doesn’t need to pay for the inventory or China warehousing fees, he/she only needs to pay for the products after they are sold.
Cons.
– Hard to manage the inventory. This disadvantage is particularly evident when the e-commerce business owner has multiple suppliers, since different suppliers may have different inventory settlement time and you can’t manage all the inventory centrally. If the inventory can’t be updated in time or some error occurs in this process, the customers may end up pay for the out of stock products or receive the wrong products, both of the conditions will seriously affect the customer’s impression of your brand.
– No opportunity to inspect the products. It’s the supplier who packs the products, it’s the supplier who sends the packages to the buyers, there is no chance for the store owners to inspect the goods. It’s disappointing to lose the control to the things which have great impacts on the customer satisfaction, you have to REALLY trust in your suppliers.
– Very few shipping options. Again, it’s the supplier who chooses the shipping methods, not you.
– Low profit margin. Since the store owners do not buy the products in bulk, only pay for several units after some buyers place orders, so the price they get can not be as low as the ones who purchase a lot once. More than that, the handling fees and shipping fees are included in the product price as well.
– Not good for long-term development. Some e-commerce platforms, such as eBay, discourage the use of drop-shipping since it affects buyers’ shopping experiences and leads to order close up.
Dedicated Fulfillment Service
Pros.
Higher profit margin. Compare to drop-shipping, choosing dedicated order fulfillment service makes it possible for the e-commerce store owners to enjoy more affordable wholesale price by ordering the products in bulk. This brings a higher profit margin, the e-commerce store owners can use the money to get more advanced services, which can help to create a better brand image and improve the customer satisfaction.
Experienced manual operation. Another advantage of the third-party fulfillment service is the staff of those companies are more experienced, because they do picking, packing, managing inventory, goods inspection everyday, it’s what they do for a living. The experienced manual operation can shorten the order processing time and reduce packing errors. Dedicated fulfillment service providers don’t sell products, they only sell hassle-free services, so they have to be good at it.
Effective inventory management. The word dedicated not only means professional staff, but also tech-oriented inventory management system. It streamlines the fulfillment process and makes the buyers’ shopping experiences more seamless.
Cons.
Extra handling fee. It generates extra handling fees if you choose dedicated fulfillment service, but all the cost are transparent, the e-commerce store owners can combine the charge items freely according to the actual conditions. It won’t raise a lot of budget, if count in the money the store owner has saved by enjoying wholesale price.
After finding out the pros and cons of drop-shipping and dedicated fulfillment service, the e-commerce store owners can make a more informed decision on e-commerce logistics solution.
