Inventory vs Dropshipping

Inventory vs dropshipping is something you will need to consider if you are going into a retail home based business.

Basically, do you want to stock the items that you sell and ship them out yourself or do you want someone else to stock them and ship them (a.k.a. dropshipping)? Or maybe both.

A lot will depend on what it is you intend on selling. For example, if you're going into the handmade industry, you will obviously be stocking the supplies/items that you are creating. If you want to get into dropshipping you will have to find retailers who have the items you want to sell who also have a dropshipping program.

There's also the middle-road in which you carry inventory AND dropship if this situation works for your particular needs or niche.

Carrying Inventory

There are a lot of benefits to carrying your own inventory, but also some potential downsides. Here is my list of the pros and cons:

PROS

  • Total control over your stock
  • Wider variety of items you can sell
  • Control over shipping methods
  • Control over packaging
  • More potential for branding
  • Higher profit margin

CONS

  • Space needed to store stock
  • More money needed up front to purchase stock
  • You could potentially be stuck with stock that does not sell
  • Shipping supplies/software will be an added expense

Dropshipping

Just like with inventory there are ups and downs to dropshipping. Some retailers have better dropship programs than others and you will need to do your research to find the most reputable ones for your home business.

PROS

  • No extra space needed for storing stock
  • No need for any shipping supplies or software
  • Purchases can be made on demand without a lot of money up front
  • Dropshipping is easier to manage with less hassle

CONS

  • Harder to brand yourself
  • Less profit margin
  • More competition from other retailers
  • No control over shipping

A Little of Both

Carrying some inventory as well as dropshipping some items may be a happy medium for you. Personally, this is what I do for my shop, Trends In Twos. Though I do stock most of my inventory, there are some larger items that are more convenient to have dropshipped. 

Think about the space you have available to store your stock as this will really help determine the best route for you. You need to be able to keep your inventory clean, protected, away from odors, etc.