If you’re an online retailer seeking to broaden your product offerings without having to make an additional cost for inventory, it is a good idea to look into the drop shipping model to accomplish this.
Drop shipping is a business model that is one in which a business entity (generally the wholesaler or manufacturer) decides to let retailers order in up to 1 item per given time and allows retailers to choose the shipping address for every purchase.
For the retailer, this means you can offer the entire line of products of one or more manufacturers/wholesalers without ever investing a penny in additional inventory.
Therefore, instead of being able to only offer a handful of “best selling” items, you are able to offer a variety of items. It is no longer important that an item is sold often or at all since the price you pay currently is simply the slowing of your website store. There aren’t any costs for holding as you would with inventory products.
The most effective way to envision dropping ship as a business model is to imagine your own web-based retail or mail-order business. They function in many ways similar. A payment is made when an order comes in, is processed , and is then delivered to the buyer.
Both in your store setting as well as in drop ship the person who will receive this package will be your client. The only difference between you and the client is that in case of one, the item is delivered directly from your place of business, and in the other the product is delivered from a different location. Now a days reseller dropship is so common and many companies offer a good profit for new comers.
You establish a connection with a drop-ship company and incorporate their services in your product catalog. Then, you log into your account with the drop ship business and make the purchase with them. You provide your customer’s name to be the delivery address of the item.
The drop ship business then wraps and ships the item, and then updates the order management system of their company to notify you the date the item was sent.
This is really the entire procedure. The time you invest in working with the drop-ship company is to add orders to their system for processing orders. They don’t involve you with any sort of shipping or packing.
Drop ship businesses vary in their offerings and the manner in which they run their business. What you are looking for in a drop-ship company if you have a little money to start.
You’ll want to find the company that has their inventory on hand. Nothing is more irritating for a customer than placing an order only to find out it’s not available for 3 weeks.
When a dropship service doesn’t keep a current inventory of its products at all times You should make certain that they have a current inventory list that is regularly updated in addition to ensuring that your catalogue will be integrated into the inventory list to show the appropriate state of every product.
You’re looking for a company which can deliver your orders quickly. Your customers don’t want to be waiting for their goods to arrive so make sure that the drop ship service delivers all orders promptly. In addition that you must deliver your items in a timely manner to avoid an delay in delivery because you waited a few days to notify them of the purchase.
You need to ensure that the drop ship provider assures delivery of the order. If the customer calls you to inform you that the order never arrived and you are sure that another order is delivered to them for free to the customer or you. It could be that the drop ship business will ask that you pay an insurance charge to ensure this promise, or they do not. In any case, make certain you’ve got a 100 100% delivery guarantee from them.
You should ensure that the business has an easy order processing along with a system for status verification. You must be able to log on online to make your order and check when they’ve been delivered.
You must ensure that the company doesn’t provide any personal catalogs or literature in the package and that they do not keep any mailing lists of your clients. You put in a lot of effort to serve your clients and should profit from the cost of acquiring these customers.
You must ensure the pricing structure you choose to use allows you to earn. A lot of drop ship companies give you discounts nearly as good as their wholesale prices and some even match their wholesale tier one prices.
There are numerous aspects to consider when deciding whether dropping ship as a business model is the best option to run your business. A lot of these have been mentioned in the bullet points above , but there are two more things to take into consideration when making the choice.
Do you think this level of distance between you and your customers okay? If you directly ship to your customers they have the option to add inserts along in the package – catalogs, sales announcements and so on. It is not a common possibility when you drop ship.
Is the structure of the cost suit your needs? When you ship using this method, you’ll be charged for shipping and, in some cases, an item-per-order drop ship cost. The first thing to consider is whether the profit structure is enough to cover your expenses after subtracting from the total cost of your purchase, which includes payments to the business and any other fees, such as processing charges for credit cards – which you are charged.
Additionally, you should take into consideration that if your business sells items from multiple companies, you’ll have to pay shipping costs to multiple businesses if the customer places an order that need to be delivered by multiple sources. This can also affect the amount of profit you earn per order.
After analyzing all the aspects mentioned above, you’ll be able to determine whether the drop ship approach is suitable for your retail business. When you spend the time to research and partner with trustworthy companies this is an excellent option to increase your inventory of products and increase the bottom line with little risk for you.