What's drop shipping and how does it work? Is it truly a kosher supply chain management model? Can anyone milk this system? The truth is that drop shipping is essentially a surprisingly straightforward process and an inexpensive entry point to purchasing and selling on the web.
The dropshipping business model works as follows: a retailer finds a product from an organization that is willing to drop ship, and then lists that product on an internet auction or an eCommerce website. The retailer, then, is in control of the advertising of that product and collecting the payment for it, but they are never essentially in possession of the item.
Here are the 1st 2 advantages of drop-shipping. Probably the most important one is that you never have to stock the inventory yourself. What this suggests to you as the retailer is that you don't have a huge capitol investment duty when you start your business - you do not have to get all your products up front. You simply list the item that the provider is willing 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 cash before paying the provider for the product.
This brings us to the following step of the drop shipping business 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, together with the order for the product. The supplier, then, is in control of fulfillment and will deliver the item to the buyer. As you can see, 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 obvious. Not having any inventory available yourself implies that you don't have to worry as much about unexpected customer or market shifts. You can never get stuck with rooms full of superseded clobber because you've never really bought any inventory. You have only 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 tiny thing. Drop shipping releases big amounts of your time that would generally be taken up with activities like stocking inventory, packing products, and standing in a line after line after endless line at the post office.
These are the fundamentals of dropshipping, but there are some other advantages that are a natural outgrowth from those already claimed.
Without the need of a warehouse or other location to store your products you will cut back on your overhead costs, and without the duty to buy stock in large quantities, you can minimize the risks of overshooting projections and getting stuck with undesired merchandise.
When you use the dropshipping model you need to use all this freed-up time to investigate your market and discover all the products that may perform the best for your business. Markets and industries fluctuate all the time, and a drop shipper can help you be sufficiently flexible to keep up with those changes.
Drop shipping also gives you a chance to look like one of the "big guys." You can offer as many or as few products as you like. Concentrate on a single product or become a 1 stop shop for a big variety of high-demand items.
The products you offer will, naturally, rely on the providers you will find. Some are bigger than others, but if you want to succeed at online selling, reliability is far more critical that just size. As you begin to get to the large potential on the Internet, you've got to know you will be able to quickly and reliably fill buyer demand.
The dropshipping business model works as follows: a retailer finds a product from an organization that is willing to drop ship, and then lists that product on an internet auction or an eCommerce website. The retailer, then, is in control of the advertising of that product and collecting the payment for it, but they are never essentially in possession of the item.
Here are the 1st 2 advantages of drop-shipping. Probably the most important one is that you never have to stock the inventory yourself. What this suggests to you as the retailer is that you don't have a huge capitol investment duty when you start your business - you do not have to get all your products up front. You simply list the item that the provider is willing 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 cash before paying the provider for the product.
This brings us to the following step of the drop shipping business 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, together with the order for the product. The supplier, then, is in control of fulfillment and will deliver the item to the buyer. As you can see, 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 obvious. Not having any inventory available yourself implies that you don't have to worry as much about unexpected customer or market shifts. You can never get stuck with rooms full of superseded clobber because you've never really bought any inventory. You have only 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 tiny thing. Drop shipping releases big amounts of your time that would generally be taken up with activities like stocking inventory, packing products, and standing in a line after line after endless line at the post office.
These are the fundamentals of dropshipping, but there are some other advantages that are a natural outgrowth from those already claimed.
Without the need of a warehouse or other location to store your products you will cut back on your overhead costs, and without the duty to buy stock in large quantities, you can minimize the risks of overshooting projections and getting stuck with undesired merchandise.
When you use the dropshipping model you need to use all this freed-up time to investigate your market and discover all the products that may perform the best for your business. Markets and industries fluctuate all the time, and a drop shipper can help you be sufficiently flexible to keep up with those changes.
Drop shipping also gives you a chance to look like one of the "big guys." You can offer as many or as few products as you like. Concentrate on a single product or become a 1 stop shop for a big variety of high-demand items.
The products you offer will, naturally, rely on the providers you will find. Some are bigger than others, but if you want to succeed at online selling, reliability is far more critical that just size. As you begin to get to the large potential on the Internet, you've got to know you will be able to quickly and reliably fill buyer demand.
About the Author:
Amanda has been a consultant for many firms re dropshipping to Singapore. She has planned, strategerized, and discuess diverse trails for firms that know the signification of drop shipment, and is well known for her insistence, particularly in the Pacific Rim area.
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