I think I want to hold Inventory
eCom Babes highly suggests and teaches drop shipping. This is truly the most affordable and profitable way of starting your business. But you still have questions! So what really goes into holding inventory?
The product
If you head on over to Alibaba and search for the product you want, you will find pretty quickly that their MOQ (minimum order quantity) is 100+.
So think about this, you are in the fashion niche, you have multiple different items in multiple different colors. You will need to purchase 100 of each of those items, in every size, in every color. That adds up pretty quick!
So now you have at least 300 items (small, medium, and large, all one color). Where do you store them? What happens if you don't sell them? You are left with a ton of
inventory!
Example: This shirt has an MOQ of 2-50, the example is an estimate if you purchase 50
50 smalls = $461.50
50 mediums = $461.50
50 larges = $461.50
Total = $1,384.50 for one shirt in 3 sizes in one color
With dropshipping, you don't hold any inventory and you don't make any purchases until you have already made a sale, meaning you will never be fronting a ton of money or losing a ton of money with purchasing your products!
The Supplies
A printer: you will be printing a ton of labels so you will need a dependable normal printer $89+ (here's an affordable one) or you can go with a label printer which is easier but much more expensive Dymo $279 (find it here). Then you need ink, for the normal printer, ink is $15 for black and $17 for color, you'll need both so a total of $32 and this goes fast, especially if you are doing well! Paper of course ($11), Dymo labels are $8.99 for a roll of 220 labels. (find it here).
A Scale: Shipping scales are about $40 (find it here)
Tape: tons of it!
Boxes: you can get free flat rate boxes from the post office but if you want custom ones you can go to Alibaba, $.35 a box with an MOQ of 2000 so that totals $700. You can also look at upaknship.com, their smallest boxes 4x4x4 is $7.49 for 25.
Poly Mailers: These are definitely more affordable if you are shipping things that will fit in them. 10x13 poly mailers are $3.99 for 25 from upaknship.com.
Packing material: bubble wrap or tissue paper
Total if you went with the cheapest option: $223.50 just to get started + at least $32 a month for ink
The Software
You'll want shipping software so you don't need to go to the post office every day and can print your own labels. Shipstation is great, they charge $9.99 for up to 50 shipments a month and $29 for up to 500.
Postage
Postage is expensive, especially right now. A 1lb poly mailer can cost at least $3-$4 if not more, depending on where it is shipped to/from.
International shipping is extremely expensive. It is about $20 for a 1lb poly mailer. Don't forget customs charges, these can be around $14. You'll either have to calculate that in or be sure your customer is aware that they are responsible for that charge.
None of this is an issue with dropshipping, your drop shipper handles it all! The average pricing for shipping on Ali is around $2-$5 for anywhere in the world.
Time
Packing and shipping orders is time-consuming, especially if you want to get the items out in a timely manner. Expect to be packing at least one day a week and remember you will also need to drive to the post office to drop off your items or schedule a pick-up.
Keep in mind that if you are shipping with multiple carriers you will need to find drop off locations for each of them, UPS and USPS don't always have drop off locations near each other.
You won't need to worry about any of this with dropshipping.
A P.O. Box
If you don't feel comfortable with your personal address on your labels, you will need a P.O. box or some address for. your return labels. This can be about $10 a month or higher.
Final Thoughts
I always suggest dropshipping first. Packing and shipping yourself take a toll, especially if you are working a full-time job. If you start to grow fast, you will very quickly realize you can't keep up with demand, and your business could back peddle, take it from someone who learned the hard way.
It is also expensive, especially if you are taking the money from your own pocket.
Once you have your store up and running and bringing in income, go ahead and try this method if you'd like, but if you are just starting the dropshipping method is SO much better, especially financially!