What is dropshipping and how does it work? Is it truly a valid supply chain management model? Can anyone take advantage of this method? The truth is that dropshipping is really a surprisingly straightforward process and an inexpensive entry point to selling and purchasing online.
The dropshipping financial model works as follows: a retailer finds a product from a company that is happy to drop ship, and then lists that product on an online auction or an eCommerce website. The retailer, then, is in command of the marketing of that product and collecting the payment for it, but they are 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 do not have a huge capitol investment requirement when you start your business - you don't have to get all of your products up front. You simply list the item the provider is willing to drop ship and then collect the payment. And this is the second advantage of drop shipping: a positive money flow cycle - meaning you receive the cash before paying the provider for the product.
This brings us to the next step of the drop shipping business - collecting the payment and transferring the order. Once a shopper has chosen your product and made their payment (including the shipping costs) you then send the wholesale price and the shipping fee to the supplier, together with the order for the product. The supplier, then, is in command of fulfillment and will deliver the item to the customer. As is obvious, the retailer is left with the difference in costs, without ever having to see, package, ship, or store the products.
The benefits from this step also should be apparent. Not having any inventory on hand yourself implies that you do not have to worry as much about sudden customer or market shifts. You'll never get stuck with rooms full of superseded equipment because you have never essentially acquired any inventory. You've merely handled the payment and the order. The supplier is the person that handles the other parts of this supply chain equation.
And the part of the equation the drop shipper takes care of is no small thing. Drop shipping releases large amounts of your time that would usually be taken up with activities such as stocking inventory, packaging products, and standing in line after line after never-ending line at the post office.
These are the fundamentals of drop shipping, but there are some other benefits that are a natural outgrowth from those already stated.
Without the need of a warehouse or other location to store your products you will ease back on your overhead costs, and without the requirement to buy stock in big quantities, you can reduce the risks of overshooting projections and getting stuck with unwished-for merchandise.
When you use the drop-shipping model you need to use all this freed-up time to investigate your market and discover all the products that can perform the best for your business. Markets and industries fluctuate all the time, and a drop shipper can help you be sufficiently flexible to stay abreast of those changes.
Drop shipping can give you a chance 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-shop for a huge assortment of high-demand items.
The products you offer will, of course, rely on the suppliers you will find. Some are larger than others, but if you want to succeed at online selling, reliability is way more important that just size. As you start to get to the large potential on the Web, you've got to know you will be able to fast and reliably fill buyer demand.
The dropshipping financial model works as follows: a retailer finds a product from a company that is happy to drop ship, and then lists that product on an online auction or an eCommerce website. The retailer, then, is in command of the marketing of that product and collecting the payment for it, but they are 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 do not have a huge capitol investment requirement when you start your business - you don't have to get all of your products up front. You simply list the item the provider is willing to drop ship and then collect the payment. And this is the second advantage of drop shipping: a positive money flow cycle - meaning you receive the cash before paying the provider for the product.
This brings us to the next step of the drop shipping business - collecting the payment and transferring the order. Once a shopper has chosen your product and made their payment (including the shipping costs) you then send the wholesale price and the shipping fee to the supplier, together with the order for the product. The supplier, then, is in command of fulfillment and will deliver the item to the customer. As is obvious, the retailer is left with the difference in costs, without ever having to see, package, ship, or store the products.
The benefits from this step also should be apparent. Not having any inventory on hand yourself implies that you do not have to worry as much about sudden customer or market shifts. You'll never get stuck with rooms full of superseded equipment because you have never essentially acquired any inventory. You've merely handled the payment and the order. The supplier is the person that handles the other parts of this supply chain equation.
And the part of the equation the drop shipper takes care of is no small thing. Drop shipping releases large amounts of your time that would usually be taken up with activities such as stocking inventory, packaging products, and standing in line after line after never-ending line at the post office.
These are the fundamentals of drop shipping, but there are some other benefits that are a natural outgrowth from those already stated.
Without the need of a warehouse or other location to store your products you will ease back on your overhead costs, and without the requirement to buy stock in big quantities, you can reduce the risks of overshooting projections and getting stuck with unwished-for merchandise.
When you use the drop-shipping model you need to use all this freed-up time to investigate your market and discover all the products that can perform the best for your business. Markets and industries fluctuate all the time, and a drop shipper can help you be sufficiently flexible to stay abreast of those changes.
Drop shipping can give you a chance 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-shop for a huge assortment of high-demand items.
The products you offer will, of course, rely on the suppliers you will find. Some are larger than others, but if you want to succeed at online selling, reliability is way more important that just size. As you start to get to the large potential on the Web, you've got to know you will be able to fast and reliably fill buyer 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.
No comments:
Post a Comment