What is Dropshipping?
Dropshipping is a simple concept of selling a product. When an order is placed by a customer, the retailer passes on the customers order information to the wholesaler or
supplier who then packages and ship the product to the customer. This method minimizes the risk for you, as a retailer, because you don’t need to purchase the product until it is
sold. Suppliers take care of the warehousing, packing, and shipping products, saving you a great deal of money.
Dropshipping business is relatively a different type of selling system used by many online retailers that do not have a physical storage facility to hold inventory. This is a
product delivery method in which the seller accepts the payment for an order, but the customer directly receives the product from the supplier.
How does it work?
Dropshipping method is acted by the supplier, retailer and the consumer. In the traditional business design, the retailers will order products from the supplier or manufacturer
and is obliged to stock products in the warehouse. The retailer then has the function to promote and advertise the product and when another retailer or an end user orders from
it, it gets its supply from its own inventory. In Dropshipping the supplier has the function to create the product and store it for itself. The retailer does not have to get the
product from the supplier or the manufacturer but is focused only in the marketing strategy and advertising of the product.
Here are the steps involved in dropshipping:
- Firstly you open a web store with a shopping cart and accept credit card on your site.
- You find manufacturer or supplier who could dropship the product.
- You open an account with the dropshippers you choose.You receive product images and information from the supplier and upload them on your web store.
- When an order is placed on your web store by a customer, your store charges them through credit card including shipping fees.
- You then contact the supplier via phone or email sharing the customer’s order, name and address.
- Once order information shared with your supplier, they will pack and ship the product to your customer.
- The dropshipper charges you the wholesale price including shipping fee. You have already passed the shipping charge on to your customer, so the shipping costs you nothing.
How does it benefit to retailers?
If you are a retailer with no upfront cost in turn allows you make more profit. With this method there is no need to have an in-house order management and inventory management
system, nor you need to pay for the inventory upfront- if the product doesn’t sell, you never have to buy it. Also, no packing, labeling and shipping cost applied, not there is a
need to built a shipping management system. You purchase products at wholesale price and set your own retail price. Whether you looking to expand your retail business over the
internet or just looking for supplemental income, there’s huge dropshipping opportunity or online business that fits best for you.