The aftermarket Auto and Truck Accessories industry has been shifting towards online sales for years. Many products require a large amount of specification, since the same product may have hundreds of variations depending on specific vehicle application, and very few local businesses offer such a wide assortment of products. These online retailers have a choice; whether to carry their inventory in stock, or whether to have it dropshipped. The danger in all this: consumers don’t usually know that they’re ordering from a dropshipper, and the risks they’re taking by doing so.
Dropshipping is the practice of selling an item that is owned by and in possession of a wholesaler, and having the wholesaler ship it directly to the consumer. Retailers that sell products in this manner pay the wholesaler the cost of the item plus shipping and handling fees after collecting payment from the consumer, thereby reducing the need for an initial investment in order to sell the product. For this reason, dropshipping can be attractive to the merchant, because the barriers to entry are extremely low – in other words, it’s the easy way. What is often ignored are the detriments to the consumer that dropshipping causes.
The first and most basic detriment to consumers is that dropshipping allows many non-established retailers to begin offering products for sale that they may not know anything about, and may not be able to offer support through consumer issues. Even if these retailers do have knowledge about the product, they are still limited by not having physical access to the product to perform inspections and verify details. When a consumer buys an item from a dropship retailer, they are not dealing with a company that can verify proper packaging and item details.
Another detriment consumers face with dropship retailers is delivery issues. Dropship retailers have limited control over delivery options, which can result in delays and difficulty making expedited deliveries. Keeping track of the quantity of an item in stock can also be challenging for the dropship retailer, which can result in consumers ordering backordered items but believing they’re in stock – greatly increasing the expected delivery time.
Pricing can also be affected by dropshipping. Dropship retailers essentially purchase items one at a time, and while they get wholesale prices, they do not get volume discounts that a warehouse retailer will get. In addition, dropship retailers often must pay dropship fees. This reduces their margins and limits their ability to offer low prices to the consumer.
The bottom line is, there are benefits to dropshipping – but those benefits are all on the side of the retailer. The consumer only faces the detriments, and usually isn’t even aware that they’re ordering from a dropship retailer or the risks that they’re taking by doing so. In industries such as electronics, a consumer may be more confident that they’re getting the right product even if it’s dropsipped; but in the truck accessories industry, where the parts and options have countless variations and fit requirements and items are often oversized, increasing the likelihood of shipping and handling errors or damage, the consumer needs to know that they’re working with an expert and they’ll be taken good care of. In the end, retailers that take good care of their customers will be successful, and having control of inventory gives the power to take good care of customers.