Wouldn’t it be great to start an online store with very little investment upfront and manage it from anywhere in the world? Even better, have someone else pay your upfront inventory costs and manage the processing and shipment of orders. It sounds like it’s too good to be true, but it’s not, if you know about drop shipping.
If you’re not familiar with drop shipping, to put it simply, drop shipping is a fulfillment model where you don’t keep the products you sell in your stock. Instead, you partner with a wholesale supplier that not only stocks the inventory for you, but the supplier then processes and sends orders directly to your customers – you never see or touch the product!
There are a lot of advantages to this fulfillment model. The biggest advantage is not having to buy inventory upfront. It’s basically a pay-as-you-go model because you don’t purchase product until you make a sale and the customer has paid, so you don’t tie up your funds in inventory. And since you don’t have to pick, pack and ship the products, it frees up your time to focus on what matters – revenue generating activities like promoting your website and investigating marketing tactics. Spending time on promoting your website is key to your eCommerce success. The fact that it’s easy to establish an eCommerce store with the drop ship model is a double edged sword – it’s as easy for others as it is for you! That means competition is sometimes steep. However, with a little bit of time and effort, you can make your store stand out, resulting in a successful online business.
Some Drawbacks Do Exist
Like anything else, the good sometimes comes with a little bad. In the case of drop shipping, aside from competition, there are some other drawbacks associated with the fulfillment model, but nothing that can’t be overcome with a little planning and strategizing. By putting your product fulfillment in the hands of another, you do give up a degree of control in terms of the way the product is packed and shipped, as well as running the risk of an item being out of stock. The latter is easily overcome by working with multiple suppliers with overlapping product lines so you always have a backup plan.
Overall, the drawbacks are minimal in comparison to what it would cost you, in both time and money, to stock, house and ship products yourself. And at the end of the day, drop shipping isn’t a new concept. In fact it’s a fulfillment model trusted by some of the big guys in the eCommerce game, such as Sears and Home Depot, giving them an opportunity to expand product lines without dealing with the hassles associated with the additional inventory.
How To Get Started
Figuring out the right products to sell and then finding a wholesaler you can trust is the tricky part. There are a lot of resources out there to help with this process, and then of course there is the good old Google search. When doing a web search, be mindful that wholesale suppliers are traditionally not the best marketers, so you may have to dig deep into the search engine results to find the right partner.
Drop shipping offers a great alternative method to get started, or expand your current product offering, without having to dip too far into your own pocket. Of course there will be some investment involved in establishing your eCommerce presence, but nothing compared to what it would cost if you had to stock and ship your own product.
For a full list of both the benefits and drawbacks of the drop ship fulfillment model, along with some tips on how to get started, check out our white paper, What’s the Deal with Drop Shipping?