Dropshipping vs. Local Warehousing

Global eCommerce has been on the rise in previous years and its growth has been further accelerated by the Covid pandemic.

This has led to many companies wanting to market & sell their products and services online. Many companies are using eCommerce to open up new markets and conduct cross-border trade.

But how should companies handle eCommerce deliveries and fulfilment? Once companies sell to foreign countries, there are two main options regarding the handling of the deliveries. In this article we will elaborate on the benefits and disadvantages of the different methods.

Method 1: Dropshipping

Dropshipping is considered to be the most cost effective fulfilment option for an exporter selling their products online. The reason it is so cost effective is because the seller doesn’t need to undergo warehousing costs in the foreign country. Instead, the eCommerce merchant sells products online, forwards the customer orders to the supplier, who is then responsible for picking, packing, labelling and shipping the products directly to the customer / online buyer.

Advantages of Dropshipping

  • Seller has full control of their inventory
  • Cost effective – Seller does not need to pay additional warehousing fees to store products locally
  • Seller has complete control of packaging
  • Seller is involved in customer service
  • Seller can ensure the quality and intactness of their products prior to shipping to buyers

Disadvantages of Dropshipping

  • Longer time for the products to reach customers as products are not stored in local target countries
  • Seller has responsibility to arrange shipments and coordinate the whole fulfilment process
  • Buyers are responsible for import, VAT, customs, duties and clearance

Method 2: Local Warehousing via local Logistics partner

In the Local Warehousing model, generally, the products are shipped in bulk to a local warehousing facility where they are being stored locally in the target country. From there, the merchant takes orders and is responsible for delivering the products to the customer. The shipping process can also be handled by a third-party logistics company.

Advantages of Local Warehousing using third-party logistics provider

  • Products can be delivered to the buyer much quicker after an order takes place – no long waiting times for buyers
  • Logistics companies have skills and experience in logistics support – professional service providers add value to the operation
  • Logistics providers have an existing network in various regions, helping the business to expand and reach new customers
  • Merchant handles import process into target country

 Disadvantages of Local Warehousing using third-party logistics provider

  • Warehousing and fulfilment fees apply
  • Seller has less control over processes as third-party provider is taking care of packing & shipping – quality of service may be compromised without sellers’ & merchants’ knowledge
  • Customer satisfaction depends on the quality of logistics service that is not in the sellers’ hands

 About Enterprise Africa

Enterprise Africa is a prestige B2B E-Commerce platform that focuses on marketing and selling quality brands in African markets. With close to 20 years of market entry experience, we provide a trustworthy platform that will encourage wholesale trade between multinational companies and African consumers in Africa’s most promising industry sectors.

When listing on Enterprise Africa, sellers may choose between the Local Warehousing solution and the Dropshipping method. Enterprise Africa provides support through assisting with import processes as well as fulfilment through local logistics partners.

If you are interested in selling your products to the African market risk, please send us an email to sales@enter-africa.com.

Enterprise Africa – Selling in Africa has never been this easy!