Limits of an ingenious concept: For whom is DropShipping not suitable?

DropShipping is on everyone’s lips today when it comes to the question of how to become self-employed in online trading in a particularly successful and secure way. The trading model has so many clear advantages that no one can question its potential. But are there limits to this particular form of business and is DropShipping really suitable for every founder? We will follow up these and other questions for you and provide the answers.

Limits of an ingenious concept: For whom is DropShipping not suitable?

DropShipping as the e-commerce concept of the future

Do you believe that online trading in Germany still enjoys good opportunities for the future or do you rather assume that we are dealing with a sinking star that has long since left its zenith behind? If your assessment in this area is rather pessimistic, then it is probably because you have dealt a lot with the publications of the more critically minded observers. They often compare the percentage increases in e-commerce revenue from the very first years with today’s and this is a serious mistake.

Let’s take a brief look at the time when the first online shops were established and when there was talk of a real boom in Internet trade. If we assume that the online economy at that time in a first year could achieve perhaps a conversion at a value of 200,000 euro and shone in the year after with 2 million, then we had to deal with fabulous percentage increases, which caused the breath of each humans at first to falter. After all, we are talking about a tenfold increase in volume and thus an increase of 1,000 percent.

In the meantime, the growth trend in e-commerce has levelled off. In Germany alone, we have long since landed in a multi-billion volume. Let’s look at a simple example. In 2012, the total turnover in the German online trade amounted to 24.6 billion euros. In the following year, the industry achieved a volume of 34.3 billion euros. Of course, there is no more increase of hundreds of percent. However, we are still faced with a growth rate of almost 40 percent.

Try to find another industry with such values. You will quickly notice that the annual growth rates in e-commerce are still considerable and leave a lot of room for new start-ups. This clearly makes online retailing one of the future-proof industries, and of course this also applies to drop shipping, as we will see below.

These features make DropShipping unbeatable

As one of the largest and most important platforms for DropShipping, we are of course asked again and again what the concrete advantages of this particular form of trading are. It is not difficult for us to give the appropriate answers to these questions. After all, the features of DropShipping are really convincing and impressive.

For most founders, it is certainly very important that setting up a company on the basis of DropShipping requires almost no seed capital. You don’t need any pre-financed inventory, no warehouse and not even real office space. Especially in the beginning a quiet corner in your apartment is sufficient. Before you start your business, you only have to think about financing your business very carefully and can usually start immediately.

DropShipping to dramatically reduce risk

It is felt to be almost as important that a start-up in the field of drop shipping is associated with a particularly good relationship between opportunities and risks. This is, of course, due to the fact that no capital is required and therefore no repayments are required. On the other hand, low running costs also play an important role. Since you do not have to pay for high rents or personnel costs, current expenses are limited to smaller items, which are also predominantly revenue-dependent.

In other words: If you do not receive any orders, you will incur almost no costs and you will not get into a dangerous downward spiral. Another advantage relates to the specific requirements placed on the founder of a drop shipping company. This is because they are much more moderate than is the case with a classic shop operator. You work comfortably from home, share your already short working hours freely and never come under an unpleasant pressure to perform.

Instead, you take advantage of the opportunities offered by the comparatively low workload and invest the time saved, at least in part, in customer care and marketing. This has a direct effect on your business volume and ensures stable sales and a good positioning in comparison to the competition.

Whoever can benefit from the advantages of DropShipping wins

Whoever uses the advantages of DropShipping wins

We therefore quickly and convincingly establish that an entrepreneur can benefit from the positive characteristics of drop shipping. The extent to which this happens depends largely on the extent to which the various benefits are exploited. An example of this to make our statement more comprehensible. As we have seen, DropShipping can be started with a minimum of effort. All you need is a quiet corner in your apartment, a computer and an internet connection. We are pretty sure that you already have these resources and that you don’t have to spend any money to be ready to go.

But now one could imagine a new DropShipping entrepreneur who does not make consistent use of these advantages. This would be the case, for example, if someone were to believe that he would have to experience his start in self-employment in specific business premises with top equipment and on an expensive computer of the latest generation. Basically, there is nothing wrong with this and it is of course up to each founder to decide which set-up he chooses for the beginning.

However, those who incur high expenses and running costs reduce the advantages that DropShipping actually offers. He no longer benefits fully from the advantages of this trading model and also loses the good relationship between opportunities and risks. One should therefore always consider very carefully whether one is prepared to hand over concrete advantages lightly, only to be able to allow oneself a luxury directly at the beginning of independence, which is completely irrelevant for the functioning of the business model itself.

Is the DropShipping concept suitable for everyone?

So when we look at the question of whether DropShipping is really suitable for everyone, we first have to make the reservation that this trading model is only the optimal solution if the founder and prospective entrepreneur is really able to maximize the existing benefits and opportunities. Those who are unable or unwilling to do so will have to bear risks even when deciding in favour of drop shipping, which can quickly make their professional life more difficult.

So before you really start building your own business based on DropShipping, you need to look closely at the various benefits and their wider implications. It is equally important to check one’s own personality with regard to general suitability for entrepreneurship. In this respect, DropShipping is not very different from other forms of self-employment.

There are certain personal characteristics and strengths that make it much easier for the prospective entrepreneur to meet the demands placed on him confidently. And on the other hand, there are characteristics and weaknesses that make it difficult to fulfil the tasks that arise. So it’s up to you to figure out what your skills as a DropShipping company manager are, and it’s not easy for most of us.

The systematic path to self-knowledge

If we want to find out something about our potentials, strengths, weaknesses, abilities and also our mistakes, then we are dealing with a discipline that is called self-knowledge. It’s about getting insights about our own person. This is difficult for us simply because we have become accustomed within society at an early stage to emphasising certain characteristics and to keeping others quiet.

For example, who would like to admit that they are fundamentally particularly lazy? Society expects a certain amount of diligence from us, and most of us behave at least outwardly as if they meet this requirement. But those who have to permanently play a certain role for their environment will no longer know exactly which characteristics they really have and which they merely pretend to have.

The process of self-knowledge demands that you really get to grips with your potential and honestly recognize both strengths and weaknesses. This is best achieved in a very systematic way. So take some time and think about the following five questions. If you find that you answer “Yes” to most of these questions, then you do not need to worry about your suitability as a DropShipping entrepreneur.

If you have to answer “No” to some questions, then this is not yet an insoluble problem. However, you have to make a little effort to be successful as an independent entrepreneur. If you answer predominantly “No”, then you should think again whether you should really start your own business. It could be very difficult for you to be successful.

Question 1: Are you an entrepreneur?

Are you an entrepreneur?

The question of whether you are an entrepreneur in type or not is not so easy to answer. There is, in fact, no basic aptitude or certain concrete characteristics that are absolutely necessary. On the one hand, it is the combination of different characteristics that enable a person to run a company.

And it is on the other hand the fundamental willingness to “do something” in the truest sense of the word. Whoever only dreams of projects and in the end is never prepared to actually take the initiative and start something, will have a hard time as an entrepreneur.

Question 2: Do you have enough self-discipline?

Do you have enough self-discipline?

Self-discipline in this sense means that you are able to get yourself to do a strenuous job without outside pressure. So what about you if you don’t get instructions and nobody gives you trouble if you don’t do anything? Can you find enough motivation on your own to still achieve something?

Or do you not succeed without this pressure to get up and take things into your own hands? Self-discipline is an important prerequisite for entrepreneurial success. So take your time to check how you feel about this property.

Question 3: Are you good with difficulties?

Are you good with trouble?

Problems are there to be solved. That’s how a successful entrepreneur would probably put it. However, we humans deal with difficulties in very different ways. While one group actually confronts the problems and actively tackles them, even if this is often rather unpleasant, the other group tries to avoid the difficulties or even deny them.

As an entrepreneur, this also applies to drop shipping, you have to deal offensively with problems and be successful in finding suitable solutions. If you stick your head in the sand instead, you’ll have a hard time.

Question 4: Do you pursue long-term goals?

Do you pursue long-term goals?

Some people live from day to day and do not rely on far-reaching plans. The other people basically set themselves medium- and long-term goals and consistently put their strength at their service. It is very important for an entrepreneur to be able to think in terms of goals and visions. Those who do not do this quickly lose themselves in the exhausting day-to-day business and are unable to realise their real wishes and ideas.

Check how you deal with this topic in your private life and draw appropriate conclusions. Planlessness and aimlessness can quickly become a problem for entrepreneurs.

Question 5: Are you good with money?

Are you good with money?

Finally, there is the question of how well you can handle money. Here it is quite easy to draw conclusions about your general abilities in this area from observations of your private life. Do you get along well with your money, plan your expenses and only invest when you can really afford it?

Or do you spend most of your money at the beginning of the month and don’t pay attention to what amounts you will need in the next few weeks? Keep in mind that responsible and conscious handling of money is an important prerequisite for successful entrepreneurship.

Are you the DropShipping type? Do you want to use DropShipping as a springboard to become financially independent? That’s a good idea. But despite all its advantages, this concept of course also harbours certain risks. Even if these are clearly inferior to the advantages, you should keep an eye on them. In this article you will learnHow to skilfully eliminate the risks in the DropShipping business and thus significantly improve your chances of success.

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