Successful eCommerce businesses all have one thing in common: terrific eCommerce fulfillment services.
Predictable and accurate fulfilment equals happy customers and positive reviews. Ship2Eu 3PL processes can save you time and money. In addition, well-run fulfillment will help you expand your business.
Dropshipping is a great option for E-commerce, but it has many risks and downsides due to Chinese circumstances. While there are definitely perks to dropshipping in 2021, there are quite a few downsides you should strongly consider before you take the plunge in 2022. In this article, I will explain to your why using 3PL( third-party logistics) is better than dropshipping in 2022.
What is 3PL?
3PL means an order fulfillment method where a eCommerce website relies on a third-party fulfillment company to take care of the warehousing, packaging, and shipping of an order.
3PL fulfillment companies work as an intermediary body between the retailer and an online buyer. A retailer buys products to sell online in bulk and gives them to the 3PL company. Once the retailer receives an order online since the eCommerce website is connected with the fulfillment system of the 3PL company. Orders will be pushed into fulfillment system. The 3PL company pick, pack and ship the goods to the buyer. Thus, in most cases, retailers avoid the dropshipping method and prefer to dispatch their inventory to a 3PL partner.
3 Biggest Dropshipping Challenges in 2022
The Supplier Challenge due to COVID-19
When you use a dropshipping method, you rely on a supplier. So, you don’t have complete control of the products and their availability.
Due to the expansion of COVID-19 in China, lots of factories and suppliers suspended work, or their productivity was largely influenced due to lack of labour force. Even though they are still available, due to resource constraints, manufacturers always give priority to their wholesaler customers or other partners.
Thus, you can’t say how much inventory is available on a particular day, the risk of your order being out of stock or long-delayed production, which brings back a bad reputation for your shop.
Dropshipping Margins are Thin
In drop shipping, you buy products one piece at a time. Therefore, you need to pay a large price. This year, raw materials prices increased a lot which caused the increase in products’ unit price, It ultimately reduces your profit margin.
For dropshippers who purchase from Aliexpress or some other platforms like this, the shipping fee is multiplied, because you need to buy products from different suppliers. The shipping fee compresses again your margin.
Many of your competitors are taking the lowest-priced approach to sell their products and this also impacts how much money you make in profit margins.
Chinese cities on Lockdown
Lots of Chinese cities are on lockdown due to COVID-19 (including many important economic production cities such as Shanghai), suppliers can not produce goods, and they can not ship out anything.
Even though you have a sourcing agent who can handle the connection of suppliers for you, they can not get products from suppliers in those lockdown cities, and the waiting is endless.
In the dropshipping method, you don’t have control over the production efficiency and shipping speed. Also, you don’t know from which city the manufacturer is in that particular order. As a result, the shipping process can get slower and more costly. In the long run, slow productivity and late delivery may affect your customer satisfaction ratio.
Why 3PL is better?
Limitless Inventory Volume
With a 3PL service, you get a lot of options to store large quantities of products in case of a shortage of supply. Inventory storage is limitless and warehousing does not have to be costly. Ship2Eu offers 60 days Free storage.
Convenient and Flexible
A 3PL company creates more flexibility for your business growth, you don’t need to worry about the supply and shipping. Once lockdown, Ship2Eu has many warehouses in different cities in China as alternatives.
Saves Your Time and Money
Outsourcing order fulfillment can save a considerable amount of money and time. Ship2Eu handles a lot of tasks that can cost you more if you control them independently. It saves the money that you would probably invest in the shipping, technology, warehouse space, and office staff.
Minimized Risk
Inventory in the off-season, sales in the peak season, working with a professional 3PL company, E-commerce merchants can do a good job in product development, marketing and service without worrying about the high rate of supply problems in this period eating up limited profits.
Customer Satisfaction
Long-time waiting is annoying. At the same time, packing and shipping orders to different places can be stressful. Ship2Eu boosts the customer satisfaction ratio by shipping your orders fast.
Dropshipping is a good business model for an e-commerce business owner who is starting small with less capital.
However, using a professional order fulfillment company helps the supply chain to be smooth and more manageable for you to focus on the marketing and growth of your online store.
Still confused? Ship2Eu experts can help you pick the best service. Get in touch for more details.
