What's drop shipping and how does it work? Is it really a valid supply chain management model? Can anybody take advantage of this technique? The reality is that drop-shipping is essentially a blindingly simple process and an inexpensive entry point to selling and purchasing on the web.
The dropshipping financial model works as follows: a retailer finds a product from an organization that is happy to drop ship, and then lists that product on an online auction or an eCommerce website. The retailer, then, is in control of the marketing of that product and collecting the payment for it, but they're never actually in possession of the item.
Here are the first two benefits of drop-shipping. Potentially the most vital one is that you never need to stock the inventory yourself. What this means to you as the retailer is that you don't have a big capitol investment obligation when you start your business - you do not have to purchase all your products up front. You simply list the item that the supplier is happy to drop ship and then collect the payment. And this is the second benefit of drop shipping: a positive money flow cycle - meaning you receive the money before paying the provider for the product.
This brings us to the following step of the drop shipping business sector model - collecting the payment and transferring the order. Once a shopper has selected your product and made their payment (including the shipping costs) you then send the wholesale price and the delivery fee to the supplier, along with the order for the product. The provider, then, is in control of fulfillment and will deliver the item to the client. As is obvious, the retailer is left with the difference in costs, without having to see, package, ship, or store the products.
The benefits from this step should also be clear. Not having any inventory on hand yourself means you do not have to fret as much about sudden shopper or market shifts. You'll never get stuck with rooms full of outmoded clobber because you have never really acquired any inventory. You have merely handled the payment and the order. The supplier is the one who handles the other bits of this supply chain equation.
And the part of the equation the drop shipper looks after is no small thing. Drop shipping frees up large amounts of your time that would normally be taken up with activities such as stocking inventory, packing products, and standing in a queue after line after endless line at the post office.
These are the basics of dropshipping, but there are some other advantages that are a natural outgrowth from those already stated.
Without the need of a warehouse or other location to store your products you may cut down on your overhead costs, and without the requirement to buy stock in big quantities, you can minimize the risks of overshooting projections and getting stuck with unwished-for goods.
When you use the dropshipping model you need to use all this freed-up time to research your market and discover all the products that will perform the best for your business. Markets and industries vary all the time, and a drop shipper can help you be sufficiently flexible to stay abreast of those changes.
Drop shipping can give you an opportunity to look like one of the "big guys." You can offer as many or as few products as you like. Focus on a single product or become an one stop destination for a massive assortment of high-demand items.
The products you offer will, of course, rely on the providers you will find. Some are bigger than others, but if you'd like to succeed at online selling, reliability is much more critical that just size. As you start to get to the big potential on the Internet, you need to know you are going to be able to quickly and reliably fill consumer demand.
The dropshipping financial model works as follows: a retailer finds a product from an organization that is happy to drop ship, and then lists that product on an online auction or an eCommerce website. The retailer, then, is in control of the marketing of that product and collecting the payment for it, but they're never actually in possession of the item.
Here are the first two benefits of drop-shipping. Potentially the most vital one is that you never need to stock the inventory yourself. What this means to you as the retailer is that you don't have a big capitol investment obligation when you start your business - you do not have to purchase all your products up front. You simply list the item that the supplier is happy to drop ship and then collect the payment. And this is the second benefit of drop shipping: a positive money flow cycle - meaning you receive the money before paying the provider for the product.
This brings us to the following step of the drop shipping business sector model - collecting the payment and transferring the order. Once a shopper has selected your product and made their payment (including the shipping costs) you then send the wholesale price and the delivery fee to the supplier, along with the order for the product. The provider, then, is in control of fulfillment and will deliver the item to the client. As is obvious, the retailer is left with the difference in costs, without having to see, package, ship, or store the products.
The benefits from this step should also be clear. Not having any inventory on hand yourself means you do not have to fret as much about sudden shopper or market shifts. You'll never get stuck with rooms full of outmoded clobber because you have never really acquired any inventory. You have merely handled the payment and the order. The supplier is the one who handles the other bits of this supply chain equation.
And the part of the equation the drop shipper looks after is no small thing. Drop shipping frees up large amounts of your time that would normally be taken up with activities such as stocking inventory, packing products, and standing in a queue after line after endless line at the post office.
These are the basics of dropshipping, but there are some other advantages that are a natural outgrowth from those already stated.
Without the need of a warehouse or other location to store your products you may cut down on your overhead costs, and without the requirement to buy stock in big quantities, you can minimize the risks of overshooting projections and getting stuck with unwished-for goods.
When you use the dropshipping model you need to use all this freed-up time to research your market and discover all the products that will perform the best for your business. Markets and industries vary all the time, and a drop shipper can help you be sufficiently flexible to stay abreast of those changes.
Drop shipping can give you an opportunity to look like one of the "big guys." You can offer as many or as few products as you like. Focus on a single product or become an one stop destination for a massive assortment of high-demand items.
The products you offer will, of course, rely on the providers you will find. Some are bigger than others, but if you'd like to succeed at online selling, reliability is much more critical that just size. As you start to get to the big potential on the Internet, you need to know you are going to be able to quickly and reliably fill consumer demand.
About the Author:
Amanda has been an expert for many firms in regards to drop-shipping to Singapore. She has planned, strategerized, and discuess various trails for firms that know the seriousness of drop cargo, and is famous for her perseverance, especially in the Asia area.
