Starting out in eCommerce

I'm a big advocate of holding stock.

The benefits for me are that

You can increase the amount you charge
You can increase the perceived value of he product
You can include your marketing material in the sales

One product I sell are whiskey drinking flutes. I import them for about 12 delivered.

I then add the following to their order:

Presentation box (branded)
Glass cleaning cloth (branded)
Glass cleaning solution sample
Whiskey drinking guide
Looking after your glasses guide.
Vouchers for cross sales.

I then sell them for 80 with extra options for gift wrapping and speedy delivery.

About 32% of customer take advantage of the offers we send.

Depends what you are selling of course.

I absolutely agree. Sure, dropshipping is easier, but will it be easier to succeed as well?

Like davejarvys already said, stock gives you numerous advantages over a dropshipping model. Especially now with thousands of new dropshippers entering the market every single day it gets more and more important to increase perceived value and try to stand outo somehow.

This doesn't mean that you can't succeed with dropshipping - you clearly can. But with pure dropshipping you have to throw in more of your money on another point - on marketing. While its easier to market a customized, branded and somehow "improved" product (like the whiskey drinking flutes above), you need some big traffic and presentation efforts to make good profits with simple resold items with low profit margins and high risks in terms of payments and slow, global delivery.

Splatterfox and davejarvys make excellent points about the advantages of carrying inventory. We have sites that dropship, sites that we inventory products and sites that are hybrids of the two. The vast majority of our more than 50 eCommerce websites dropship, however.

Some disadvantages about carrying inventory are that there is a higher initial cash outlay for the inventory and much higher risk, since you cannot know for certain what will sell well, how much to order or how long it will take to sell. You run the risk of some stock becoming outdated, too. You also cannot typically carry as wide a variety as you can with dropshipping. You also have added expense/time commitments with shipping and returns. On the plus side, you have complete control over handling orders and the timeliness of shipments and typically can get a little better wholesale price when buying in bulk. Another major advantage to buying in bulk is that you virtually eliminate any resistance by a supplier to let you list their merchandise - what brand is going to say "no, you can't order a bunch of our stuff and sell it"?

IF you can get a great dropship supplier (a BIG IF) who has excellent customer service and prices, dropshipping removes a whole lot of the above-mentioned problems. Zero cash outlay for inventory, no worries about things becoming outdated, no concerns about how much to order and you can offer every product your supplier carries.

Perhaps the best solution is to begin by dropshipping and once you see what the hot sellers are, order those things in bulk and get better wholesale prices on them. If you are selling relatively generic items, after seeing what the hot items are, see if you can get them white labeled as your own brand. We've even had two sites in a niche where one just dropships and the other uses the intelligence gathered from the dropship site to order just the best sellers.