In a news article from New Strait Times:
Malaysia is weathering its worst economic recession in its history just as other developed nations are facing deep downturns due to the Covid-19 pandemic and Movement Control Order (MCO).
Due to current economic uncertainties, many people are starting to explore a home based business as a back up plan just in case they loose their primary source of income.
I have been running my own home based online business in Malaysia since March 2018 and I know the most popular business model is with dropshipping.
What is dropshipping?
According to www.entrepreneur.com, it defines dropshipping as:
An ecommerce website that operates a drop shipping model purchases the items it sells from a third-party supplier or manufacturer, who then fulfills the order.
If you are starting from scratch, the easier way to have a home based online business that uses the dropshipping business model is to signup for a Shopify Store or Aliexpress.
It is very fast and easy to have your website up and running and you can start to operate your online business.
The negative aspects of dropshipping business
Starting a home based dropshipping is simple, but it is by no way easy.
In the following section, I will share 5 disadvantages of starting a home based business by using the dropshipping business model.
1) Small profit margin
No doubt your overheads for your home based business is low, but each product you sell via dropshipping will also earn you only a small profit margin.
In order for you to generate sufficient money from your home business to worth your effort, you have to find a ways to do large sales volume.
2) Lots of other competition
Because it is a pay per sale (PPS) model, the dropshipper will take in almost anyone to be their agent.
Therefore, don’t be surprised when you see lots of other competitors selling the exact same product you are selling from your Shopify Store or Aliexpress account.
The only way for you to differentiate from your competitors is to see who can sell the product are the cheapest price.
That is one of the reason why your profit margin is so low because if you were to sell at a higher price, your prospect will just go to your competitor who is willing to sell at a lower price.
3) You have no control over the delivery
If you are new to running an online dropshipping business, know that it can be very stressful because you have no control on the delivery process.
You are at the mercy of the dropshipper!
If the dropshipper you are partnering with is lousy, be prepared to receive lots of angry emails and messages from your customers demanding what is the status of their order.
If you don’t response to them quickly, be prepared to start processing refund instructions from your customers and receive negatives reviews and comments on YOUR level of service.
Yes, if your dropshipper did not perform, your customers will think it is due to your incompetency.
4) You are legally liable
You are legally liable as an agent for the dropshipper for whatever product is being delivered.
This is very dangerous if the dropshipper is selling fake or counterfeit product.
Since you are the point of contact, a customer suspecting something is not right with the product they’ve order can report you to the police for cheating.
5) Hard to build your own brand
Since you don’t own the product you are selling, it is hard to build your personal home business brand.
How important is business branding?
Check out the article below from Deluxe.com on the importance of branding for a small business.
[6 reasons why a strong brand is important for your small business]
Conclusion
After knowing the 5 disadvantages of running a home based business using dropshipping model, is it still worthwhile to do so?
My answer to the above question is, YES it is but you have to find an excellent dropshipper.
If you have been reading my blog, you’ll know by now that the business model I used is also dropshipping.
The company that I partnered with is none other than BE International location at Bukit Jalil, Kuala Lumpur, Malaysia.
The company is one of the faster growing MLM company in Malaysia.
The distributor’s business model that the company has are dropshipping and multi level marketing (MLM).
BE International has been my sole dropshipper since I started my home based business selling the Aulora Pants with Kodenshi and the Shiruto vitamin from Japan.
Below is a simple diagram of what BE International does as a dropshipper.
If you would like to start your own home based business by partnering with BE International, the first step is to register as its member.
What are the member’s benefits?
Check out the article below where I share the BE International member’s benefits.
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