Drop Shipping is a popular way of doing business online. Under this method, an online store does not keep a stock of its products, instead purchase them from a third party vendor and deliver it directly to the customers. This process never allows the online store to check or handle its products.
This process is quite different from the traditional standard retail method as the business owner does not maintain an inventory of its products. The third party could be a wholesaler or manufacturer who fulfills the order requirements.
So would you think about starting a drop shipping store for your business? This is a faster way of doing business. You can choose some wonderful products through this process and quickly import them and start selling online. Here is the ultimate guide to drop shipping.
How Drop Shipping Benefits Your Business?
You can run your business with minimum capital
The best part of drop shipping business is that you can start your e-commerce store without investing a considerable amount of capitals in keeping an inventory, unlike a traditional business where an enormous amount of money is required to purchase and maintain the list.
You need not have to buy a product in the whole process till the time you do not start selling them and being paid by the customer. Without any significant investment for your inventory, this method allows you to start with a little amount of capital.
It Minimizes the Hassle in Business
Since you will not require physically dealing with the products in drop shipping, you can run your business in a less hazardous manner. Things that you will be less worried about –
1. Paying for a warehouse and its upkeep and maintenance
2. Packaging of products and then shipping them to the end users
3. Inventory tracking facility to manage your accounts
4. Handling of the items which are returned due to any fault and any inbound shipment related things
5. Consistently placing orders for products and maintaining the right stock level
It Helps To Cut Down Overhead Cost
You can cut down your overhead production through this drop shipping method as there will be no requirement to maintain a warehouse for your products. You can run your business from home with a laptop. When your business grows the overhead cost may go up a little higher, but it will still be lower than the price involved in running a physical store.
It Gives Flexibility in Your Business
If you have an internet facility, you can run a drop shipping business from any corner in this world. You need to communicate with your vendors and customers frequently to effectively run your business.
You can Offer a Wide Range of Products
This process does not require you to purchase the items in advance which you do not want to sell. So you can provide a range of products to your target customers. When you find a supplier, who delivers one of your products you can list it in your website for sale in free of cost.
It Helps You to Experiment Products with Less Risk
In a traditional business, when you experience growth, you will need to work harder to sustain it. When you rely on the wholesaler, most of the additional burden regarding orders will be shouldered by the suppliers. This automatically minimizes your stress to a large extent. We all know that the growth of sales will come with the extra burden and mostly it will be related to customer service. But most of these issues will be taken care of by the supplier himself.
So drop shipping is an excellent way of doing business for the startups and the established businesses. However, you must know how to do business with drop shipping as the process is not free from risk.
Rely on drop shipping in Initial Stages of Your Business
Drop shipping works well for the temporary projects, or you can say in the initial stages of your business when the capital is low. This initial phase can be termed as market research or in other words a trial period when you want to experiment with a particular product. So instead of maintaining a warehouse for your product, you can take the risk of doing it through a drop shipping method. There is always the risk involved in trying out new products in the market, and you can minimize this through drop shipping.
You will know which product will be sold and which will not and will have a better knowledge of how much it would be sold. This will enable you to know how much you will require maintaining for your initial stock. In short, drop shipping prevents you from stepping into dangerous waters.
Get rid of Overselling of Products
The established e-Commerce dealers always know that nothing can be predicted about the market. So more than spending on an inventory full of overstocked products they often keep drop shipping as backup support to save money in the process.
Fulfill Your Seasonal Sales Demand
As a business owner, you can cut down the cost of maintaining an inventory of only those products you sell in the market and simultaneously fulfill any sudden demand comes up through drop shipping. It will safeguard you against the uncertainties of the market or deal with extreme situations such in case of any natural calamity when your warehouse will be lost. In such instances, you can still do business through drop shipping.
Streamline Your Shipping System
Many times, shipping complications arise with the expansion of the business. The distance of your warehouse center also put an impact on the shipping fee. Drop shipping helps you in those locations which fall out of your profitable shipping center. Moreover, when you ship out of your country, you will require paying an additional fee. So you can rely on drop shipping for such areas which falls outside of your boundary. In a new location, you can try out drop shipping to see it is worthwhile or not.
Maintain Your High-end Products with Drop Shipping
- It takes more money to stock and ship certain products and in such situations drop shopping help you.
- Those products which are large and need spaces more than usual. The sale of such products even does not come equal to the cost of the extra storage room.
- Heavyweight products also cost more money in shipping, so drop shipping helps to deal with that.
- When you have fragile products to be shipped, you can rely on the drop shipping supplier to cater to your requirements.
- Expensive products such as antique pieces, jewelry, etc. need to be shipped with much security. If the warehouse security is not up to date, they can be stolen. This is often seen as not every warehouse features such facilities. Through drop shipping, you can transfer this risk to your supplier.
- Some items need special attention when you want them to be shipped in frozen condition or giving protection against light. Drop shipping helps you to store them and ships them with care. If they are not your niche products, it is useless to invest money in their stock and subsequent shipping that will cost extra charge.
It is an entirely legal practice. Problems will arise only when there are legal issues with your supplier. Otherwise, the practice itself is legal. From the above analysis, it is clear how to go ahead with this drop shipping business. The ultimate guide to drop shipping is to know your products well and then find a reliable supplier or drop shipper in a remote location like China and start your business. A professional agent can help you with the necessary guidance in this matter as they know the drop shipping market better.