In today’s cut-throat eCommerce market, retailers are turning to Drop Shipping to send online orders directly to their customers. It’s a strategy designed to help them compete with rivals without spending more on inventory.
When starting a new business, many people now open an online store instead of a traditional brick-and-mortar store, because it’s cheaper and easier. Now, sellers don’t even have to carry inventory.
WHAT IS DROP SHIPPING?
Drop shipping, simply put is when a retailer does not keep an inventory of their goods on hand, but instead works with a wholesaler that fulfills an order and also ships directly to the customer.
This retail technique is becoming an integral part of many growing online businesses. It helps solve the problems of ordering inventory in advance and transporting those goods to your customer. Instead, you just have the wholesaler ship the item with a customized label and invoice. The beauty is, your customer probably won’t know (or even care) how it got there.
This supply chain method is a great asset to starting an online store, but it’s not without its problems. Let’s talk a little bit about the pros and cons of using Drop Shipping.
“You can run your business from the beach.”
Benefits of Drop Shipping
The main benefit of Drop Shipping is eliminating the worry of having inventory. When you work with a supplier, you don’t need a large amount of capital to get your online store running. Wholesalers have large amounts of inventory and a wide variety of products on hand. This allows sellers to offer customers a greater range of products. Not having to worry about supply as you create the demand can go a long way. It also reduces the stress of starting your own online shop, not to mention the fuss of packaging and shipping. Wholesalers will take care of that for you, shipping your orders directly to your customers. With these two big checks in the pro column, we can jump directly to the flexibility factor. You don’t even need a physical location. You can run your business from the beach, or the shopping mall, or anywhere with a reliable Internet connection.
Disadvantages of Drop Shipping
Drop Shipping is not a well-kept secret. With its great benefits, many online retailers have already taken advantage of this tool. This, in turn, creates competition in the market. It will be hard to distinguish yourself from other online shops that are also offering a wide variety of products. And with competition comes the other downside, which is a loss of profit. Your profit margins will definitely take a hit while competing with your rivals.
It can also be challenging not to physically see the products you are selling. You may also lose the ability to quality control items before they are shipped to your customer, creating the opportunity for errors that are ultimately out of your hands, but your problem in the eyes of your customer.
How to Choose Your Wholesalers and Suppliers
When reviewing the pros and cons of Drop Shipping, …read more
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