All You Need to Know About Drop Shipping
The business industry, specifically supply chain management, has a new and innovative way to make money online. Both entrepreneurs and aspiring business owners are intrigued by the technique called drop shipping. Retailers don’t need to keep stock of the items and products they sell. Instead, they act as the middle-man. They send the customer’s order and shipping information to the wholesaler or manufacturer who then delivers the goods or products directly to the client.
What Is Drop Shipping?
In simpler terms, drop shipping works this way:
- The retailer finds manufacturers that offer drop shipping services.
- Once they are successful in locating a reliable and trustworthy supplier, they open an account with that person.
- When the account has been confirmed, the drop shipper will render the retailer with photos and products descriptions.
- These product details can be posted on popular online trading platforms such as eBay or the retailers own website.
- Then, it’s time to get selling. After the retailer successfully closes a sale and receives the customer’s payment, they pay the drop shipper’s asking price, and the remainder serves as their profit.
- Once done, the drop shipper will deliver the product directly to the customer.
If all the processes work seamlessly, drop shipping can be a dream job; however, let’s take a closer look at the pros and con of drop shipping. .
Pros Of Drop Shipping
One of the advantages of drop shipping is that it only requires a small capital or no cash-out to get you started, so you don't have to break the bank. The traditional buy and sell technique requires spending thousands on stock and display space.
In drop shipping, you will only need to pay the manufacturer or supplier once the customers wire their payments to you. Drop shipping is beneficial to those who want to start an online business and those who are working on a tight capital.
This technique is suitable for those who seek results before committing to online selling. In drop shipping, all the logistics necessary for packing and shipping products to customers will be taken care of by the supplier/manufacturer, so there’s nothing to worry about. In addition, drop shipping does not involve any online marketing risks.
The traditional buy and sell method already proves that storing bulk products might be a problem if the trend for that item decreases. As a result, your capital will not fully return a maximised profit. Unlike in drop shipping, you will instantly see profit once the customer sends the payment to you .
One of the disadvantages of drop shipping is that the retailer doesn’t have the chance to inspect the item before it gets delivered to the customer or verify if the product is sent before the agreed deadline. When something goes wrong, all complaints and negative feedback will go directly to your eBay account or online store. Another drawback of drop shipping is it can be pricey compared to wholesaling.
Usually, drop shipper adds $2 to $5 to all the products as a fee for risks and processes. In addition, given that one of the great avenues in selling products online is eBay, the competition is tight. With the existence of hundreds of sellers offering the same product, the chances of selling your product has low probability.
All the drawbacks can be resolved by finding a reputable online services supplier. If you want to be successful in drop shipping, it all boils down to your entrepreneurship skill