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What Is Drop Shipping?

July 15, 2019 eCommerce Tips

What is drop shipping? The drop shipping business model is one of the vast ways of making money on the internet by entrepreneurs. Many online entrepreneurs are beginning to invest in the drop shipping industry because of how profitable and easy it is to run the business.

Many e-commerce startups have not engaged dropshipping because they have little or no idea of what it entails. For this reason, they end up not investing in it. In this article, we will be throwing light on what is drop shipping? The benefits, as well as other vital things you should know about drop shipping.

What is Drop Shipping?

Drop shipping is a business venture and online retail fulfillment that does not require you having an inventory of products you are dealing on. The e-commerce store rather gets an order for an item and passes it to a third-party supplier who then delivers the item to the doorstep of the customer for you. This means you do not have to have worry about the stocking the products.

This model of business is mostly common with a single large order of a product. The merchant profits from the difference between the sales price and the wholesale price of the product.

Dropshipping is different from a standard retail model such that the selling merchant will not be involved in the manufacture, packaging, and handling of the product. You are sort of acting as the intermediary between the supplier and the customers.

Dropshipping is a business structure that does not require a brand owner having an inventory. Once a good has been ordered for, your supplier delivers the product, from their stock, directly to your customer.

Now that we have explained what is drop shipping, let us take a look at some of the benefits of dropshipping.

What Are The Benefits Of Dropshipping?

Some of the benefits of drop shipping include:

Low Capital:

One of the rewards of the dropshipping business model is that investors will not have to dole out huge capital to set up an e-commerce store. This is unlike traditional retailers who have to invest huge capital in purchasing inventory. The responsibility of shipping the purchased products lies on the third-party supplier.

The huge amount of money that should have been used to build up a stock of items can be channeled into other areas of the business.

Instant Selling:

in the traditional retail model, advertisement of a product cannot be done before its arrival into the inventory. The selling merchant has to ensure that the item is available before the ad campaign kicks off. This is to ensure that there will not be any hitch in delivering the products after purchase. For this particular reason, there is a delay in sales.

The drop shipping business does not require the physical presence of the items in the merchant’s inventory before advertisement and sales commence. A sample or photo of the products from the supplier is enough to enable you to get started immediately.

Sales of Huge Variety of Products:

One of the factors that contribute to the limitation of the sales of products by merchants is the inventory space. The less spacious the inventory space the less the range of products offered is. Dropshipping ensures that you do not have to worry about where to store the products you are selling. An inventory is not even needed in the first place. You can simply list the different sizes, models, and colors of products you are dealing on, on your e-commerce website.

Huge Customer Base:

The internet is crawling with a huge amount of users. Having an e-commerce website for drop shipping avails you the opportunity to expose your products to a bigger audience. This, in the long run, assists you to expand your market and customer base.

Lower Risks:

One of the challenges selling merchants deal with is the handling of the products in the inventory. For brick-and-mortar retail stores, they are often left with the task of preventing damage of items in stock. This costs them additional money to actualize this goal. In the dropshipping business, the seller does not bother themselves of handling the products, as they do not have an inventory of the products.

You can invest in a product without the need to test the waters. You will not be bothered if the product will eventually be sold or not as you do not have their inventory.

Less Effort:

For someone that has little time or resources, running a drop-shipping store will not be a problem. A dropshipping store is easy to set up and does not demand the input of a huge amount of your time or resources. You can run it from the comfort of your home or any place of your choice. The majority of tasks can be automated while you invest your time in other areas of the business or your personal life that demands attention and personal approach.

Increase Cash Flow:

Since there are low risks and no inventory of the products, investors in the drop shipping make great profits. The products are only distributed from the supply chain to the consumers after they are paid for. In addition, the cash the nature of the drop shipping avails to you enables you to invest them in the marketing strategies and subsequent increase of customers.

Flexibility:

The drop shipping business can be run from anywhere and anytime. This is possible as long as there is an internet connection. The internet connection enables the sellers to communicate with the suppliers and customers. It offers flexibility to respond faster to their customer and make quick deliveries.

There you have it! Above, we have been able to explain what is drop shipping, and the benefits of drop shipping. The drop shipping business model is quick, easy and costs less to start. You will not need an inventory, which contributes to huge capital required to start a retail business. To invest properly in the dropshipping business, you have to choose a particular niche that you are interested in. Invest until you have established yourself before you can diversify into other niches. Also, choose the right supplier that will hand packaging and delivering of products to your customers.

In case you want to know more about what is drop shipping business, contact us today at Fulfillman. We are experts in Drop Shipping services, China sourcing, Warehouse fulfillment, Third Party Logistics, and many more. Our dedicated team will be available to speak with you. We will provide suitable answers to your questions and concerns. With us, you are guaranteed to get quality and excellent services.