Drop shipping is a technique of supply chain management, where in, the retailer does not keep the goods he sells in stock, instead transfers all the customer orders and shipment details of the purchase, to the manufacturer or a wholesaler, who then directly ship the goods to the customers.
Commonly, in retail businesses, the retailers earn profits on the difference between wholesale and retail price. But some retailers earn commission on agreed percentage of sales that is paid by the wholesaler to the retailer.
There are two main advantages of drop shipping i.e. it eliminates the upfront inventory costs and there is incoming positive cash flow.
Drop ship business has now become the easiest way to sell and earn online. Many people hesitate to start online stores due to startup costs and hassles of fulfillment. People who do drop ship business are offered with upfront inventory costs on thousands of products and management of all the fulfillment operations that makes it easier for them to earn money with less effort.
Some benefits of drop ship business include:
- No startup investment on upfront inventories, with thousands of products to offer the customers.
- No worries about fulfillment.
- Provides more time to concentrate on marketing, operations and customer service.
- Convenient and can be operated from anywhere with Internet connection without physical hassles of fulfillment.
- Provides wider selection of products to the customers without having to deal with increased inventory hassles.
Launching an ecommerce business online and helping it grow successfully needs a lot of effort and work, which is difficult due to limited resources. Hence, these benefits make it easier to operate and build up a better platform to work on.
Drop ship opportunity
When warehousing inventory is not feasible, Drop shipping is the best option. Speed of the shipments, quality of the products and their pricing are a major concern to deal with in drop shipping. Before starting, a thorough research on products, examining their quality, reviews and shipping speed of the supplying company helps decide their prices and provides customer satisfaction, thereby increasing more opportunities for the business.
Drop ship businesses require direct dealing with their customers. Drop shippers are required to build and market their own website, handle customer support issues and handle any problems that arise, as they act as an intermediary between the suppliers and the customers.
Retailers that drop ship merchandise from wholesalers take certain measures to keep the wholesale source from becoming widely known. This may be achieved by blind shipping (without return address) or private label shipping (where merchandise is shipped from the wholesaler and return address is customized to the retailer). A customized invoice indicating retailers’ company name; logo and contact information is also included by the wholesaler.
Ecommerce is best lauded by Drop shipping business. Drop shipping best utilizes the definition, of a business, or any commercial transaction that involves the transfer of information across the Internet by sending and receiving the purchase and shipment details, thereby taking ecommerce to a higher level.