What is Drop Shipping and How does it work?
What is Drop-shipping?
Drop-shipping is a business model that lets you to market and sell unique products without any inventory and storage. Moreover, Drop-shipping makes the business quickest and easiest in an economical way. It is a fulfillment model in which a store doesn’t keep the product it sells. Instead, the store purchases from a third-party vendor, which ships the product directly to the customer.
How Drop-shipping works?
When a customer places an order with a store or shop. The shop places the order with a supplier. The supplier packages and ships the product to the customer. The manufacture’s role is equivalent to a supplier in drop-shipping business. The retailer/store is responsible for any inquiries and complaints related to the customer.
The info-graphic provides a guide and overview of the drop shipping business. This tells you how exactly drop shipping works.
Pros and Cons of Drop shipping:
Starting a drop shipping based eCommerce store is too easy because it requires only little effort. It is not necessary to be an expert in business to start it. You don’t need storage space or warehouse, so there is nothing to worry about shipping and stocking. It is a time-consuming process as you are not dealing with any kind of inventory.
Shipping complexities, inventory issues, the low margin on products, and the competitiveness in the market are a few of the cons of drop-shipping for drop shippers. Also, you have low product choices in the online store while selecting.
Considerations while selecting a product:
Drop-shipping is always associated with scams and rip-offs. Real wholesalers never charge monthly fees. It is very important to differentiate between suppliers and directories who ask for membership fees. Many drop shippers do the filter on window shopping merchants who waste the time with minimum order size and a lot of queries.
Always think about your marketing potential. This includes how you market the product before launching. Selling a product with many accessories helps in improving the margin of your product.
Try to find out the new models of products that are not updated. Try to sell your products that are not available locally. Last but not least, the smaller the item the easier to ship with a low cost.
Create custom product pages to your website. It is easy to sell a business built in independent websites.
Drop-shipping has emerged as a well-known and widely spread business model in the e-commerce industry and will be growing at a rapid pace in the future. It is a low-risk business model because the startup cost is negligible. It also reduces the inventory cost, cost of employees for packaging and shipping, storage cost of a product. You could eliminate the cross-border taxes and duties.