When was the last time you assessed your business’s storage and shipping process? When your business is contingent upon order fulfillment, you have to make choices that consider both your capacity and your budget. That’s why your inventory and shipping operation may need to be reconfigured.

This comparison between warehousing inventory and drop shipping solutions can help small businesses make essential operational decisions. Each point is called out as an operational positive or negative (+/-) or a budgetary positive or negative (+$/-$).

Warehousing Inventory:

+ Control Over Inventory
With warehousing inventory, you have full control over your stock. You can manage inventory levels, conduct quality control, and ensure timely shipments to customers.

+ Customization
You have the flexibility to customize packaging and branding according to your brand's identity, which can enhance customer experience and brand recognition.

+$ Bulk Discounts
Purchasing inventory in bulk often allows you to negotiate better deals with suppliers, leading to cost savings per unit.

+ Shipping Control
You can choose your preferred shipping carriers and methods, potentially offering faster or more economical shipping options to customers.

-$ Inventory Management
You'll need to invest in inventory management systems and personnel to handle receiving, storing, and tracking inventory, which can incur additional costs and complexity.

-$ Storage Costs
Maintaining a warehouse incurs expenses such as rent, utilities, and insurance, which can impact your overall profitability.

Drop Shipping Solutions

+$ Low Initial Investment
Drop shipping typically requires minimal upfront investment since you don't need to purchase and store inventory. This can be advantageous for businesses with limited capital.

+ Scalability
Drop shipping allows for easy scalability since you're not limited by physical storage space. You can quickly add new products or expand into new markets without worrying about inventory constraints.

+$ Reduced Overhead
Since you don't hold inventory, you avoid costs associated with warehousing, such as storage space, utilities, and staff for inventory management.

+ Risk Mitigation
With drop shipping, you're not committed to purchasing inventory upfront, reducing the risk of unsold stock or obsolete products.

- Limited Control Over Fulfillment
You rely on suppliers to fulfill orders, which may result in less control over shipping times, packaging quality, and inventory availability. This can potentially impact customer satisfaction.

- Supplier Dependence
Your business success is partly reliant on the reliability and efficiency of your suppliers. Issues such as stockouts or shipping delays from suppliers can affect your reputation and customer relationships.

-$ Lower Profit Margins
Since you're not buying in bulk, your profit margins may be lower compared to traditional retail models. Additionally, drop shipping fees and commissions to suppliers can further eat into profits.

The reality is that what you’re doing now may have been the right decision for you during a different season of business. That doesn’t mean you can’t benefit from a strategic assessment of your operation. Choosing between warehousing and drop shipping depends on a lot of factors, like budget, control preferences, scalability goals, and risk tolerance. While warehousing offers control and customization, it requires higher investment. Drop shipping offers lower upfront costs and scalability but less control over order fulfillment.

At Brockman Trailers, we’ve helped many customers bridge the gap between these two options. By implementing the use of storage trailers and customizing elements of your operation around them, you can capitalize on the benefits of increased square footage without taking on the level of overhead that such storage capacity entails.