Drop shipping is a type of business where the seller gets the orders from customers, but does not have the stock at hand. The stock is normally with the manufacturer, hence, the seller sends the order to the manufacturer. Then the manufacturer ships the products straight to the customer.
Print on demand is a type of business whereby you work with a supplier to customize their products using your designs. They then send the products to customers when the supplier receives orders, but sell under your brand.
For example, printing t-shirts for a supplier and selling them when orders are received but sell through your business.
Outsourcing is where a company agrees to hire another independent company to be in charge of activities that are existing or could be done internally by the respective hiring company. It also involves transferring employees from one firm to another.
Pros And Cons Of The Three Types of Business Drop Shipping, Print On Demand And Outsourcing
When trying to choose between these three types of businesses, you should consider weighing their cons and pros first.
1. Products can be used for promotion purposes
This is where a company may order bulk produce of t-shirts to advertise their company. T-shirts are the most basic forms of promoting companies since when they give random civilians as gifts, they get to wear them in different places, therefore promoting the company.
2. Wide market
It happens to reach a wide audience since this print on demand business is online-based. Therefore, it reaches both local and international clients.
3. Easy to start
It is simple to start print on demand since you only need an account with a presentable profile and added products or services which you offer.
4. Freedom to work with whatever you wish
Since you are the one who starts print on demand individually, you have the freedom to decide on what you want to deal with, for example, if you want to specialize in t-shirts only or even mugs. It all depends on your preference.
1. Limited for simple products
Special printers are involved, and they do not work on everything. There are specific materials that print on demand works excellently on, such as t-shirts, hoodies, mugs, and sweatshirts.
2. Relationship with customers is not achieved
One does not get the chance to interact with the customers directly. Feedback from customers regarding your products may not be sufficient to know what to improve.
1. Delivering goods is faster
This is because one has a third party in charge of the handling, labeling, and delivery. This saves your time as well as the customer’s time.
2. The startup capital is low
Drop shipping eliminates the risk of spending money unnecessarily or having a large amount of unsold stock. Drop shipping is also an online-based business, therefore does not require much capital.
3. Ability to explore various markets
One can deal with various products from various origins. One may also try to agree with suppliers in a specific country where the respective customer is to deliver to the customer since it will save time. This may be a wise alternative since you are also creating a network with another supplier.
4. Relationship with customers is achieved
This is whereby the customers can directly give you feedback regarding the products involved as well as your service, which helps you as a business person improve where needed.
1. Sudden stock shortage
This may happen when customers tend to order a particular product at the same time till it is sold out yet not all customers got the product. This situation leaves the drop shipping seller in a very hard situation since he or she has to find the products for the customers who already paid, but products were sold out.
2. High cost incurred
A drop shipping seller may face higher costs since the packing, labeling, and delivery, labor has to be accounted for. The output costs increase as the sales volume increases. At some point, the drop shipping seller may go to a loss, since the amount of money he or she pays for the services done may be more than the profit received.
1. Ability to focus on weak points
There is enhanced freedom since when you pass on the processes needed to be accomplished, you will be able to concentrate on your weak points and be able to improve on them.
2. Getting more experts to learn from
A company may be having a good team of employees, but nobody is perfect in whichever way. When outsourcing, you can find other employees that have certain skills that are new and are good. From this, you can learn from them and enhance it on your employees.
3. Work is done faster
By outsourcing some employees from external agencies, the work in the company will be completed faster since there is an increase in labor.
4. Reduces work relationship
If your employees are fond of one another and have a good relationship with you as the employer, they will be working at a certain pace reluctantly since you are used to one another. When you are outsourcing employees from an external firm, they will minimize the working relationship and work as to the contract agreement.
1. The high-security risk of company data
One should be cautious when dealing with external labor since the company’s private data is at risk. You could be passing the privacy of others into the hand of people you do not know well.
2. Creating an unfavorable working environment
This may occur when you outsource employees, which means that you are denying your internal employees the chance to do all the work which promotes development. At some point, it may not motivate the internal employees, which might lead to boredom.
You can now try to choose between these three categories the one that best suits you and your interests. The starting capital should also be considered.