How Drop Shipping Model Is Beneficial For Ecommerce Business?

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E-commerce

Gone are the days when anybody with an internet connection could post just about any product online and have a good chance of making a sale. The idea of buying a product online was a novelty, and the competition was minimal in the infancy of the internet. As the internet has evolved, so have the users.

I’ve been selling online for several years, and I’ve found one single method that has been an important part of my online strategy or arsenal of tools to use. That is, without a doubt, dropshipping. Many of you know this term, but for those of you who don’t, let me briefly explain. The dropshipping fulfillment model has many advantages.

The biggest advantage is that it saves you the cost of building up your inventory. This is a very good option, especially for start-up ventures where finance might be a problem. Dropship fulfillment services help you use your cash for building up other business features, rather than tying your funds up in inventory that may not sell as fast as you want it to.

Reduce Losses

You are not left holding dead inventory that does not sell – a problem for many business owners. Money tied up in stock that is obsolete can affect your company’s bottom line. You may be forced to offer huge discounts and incur losses to get over such situations. Yet, with a drop shipping fulfillment model, you steer clear of these circumstances.

Less Hassle of Shipping

With a drop shipping model, you do not have the hassle of shipping your products, which involves opening an account with shipping companies and employing people to handle shipping affairs separately. These both mean more money out of your pocket. The drop shipping model helps you save on the cost of hiring more people and the cash required to open shipping accounts.

No Need To Control Inventory

As you are not bothered about ordering inventory, you can add the latest fast-moving products to your website instantly at no extra cost. If a customer shows interest in a particular product, you can have that item on your list immediately.

Reduce Product Delivery Time

There is a vast difference between an Internet-based supply system and supplies going out from a traditional business set up. An offline business model is associated with slower supplies, as they work on a logistical system that has huge limitations.

For them, running a fulfillment system is a major part of their overall set up. Internet retail is comparable to mail order; the product delivery is completely outsourced and shipped to clients in parcel size packs. Delivery is done in the shortest possible time with this model.

No Need to Rent A Warehouse

One of the biggest advantages of dropshipping is that you do not pay for anything until after you sell it. The drop shipping model offers you convenience in the form of not having to own or rent a warehouse, hire people for the sole purpose of packing, shipping, and managing the warehouse and the additional costs of warehouse maintenance. Having a third party to manage everything related to shipping can take a huge burden off your shoulders.

Transparency in Business

Dropshipping is a very transparent business. Once you establish a working relationship with a drop shipper, you can send them your company labels and forms, so that the package looks like it is delivered from your warehouse.

Additionally, drop shippers give you a wide range of products to choose from so that you can sell much more. This would not have been possible with brick and mortar stores without incurring huge costs of maintaining a fresh inventory of newer products.

Reduce many Expenses

Dropshipping may cut down on your profit margins, but it is a more preferred shipping option as it saves you on other expenses that you would have incurred by shipping products yourself.

While there is the risk of depending on a third party to deliver as per your standards and requirements, choosing an experienced and reliable drop shipper can help you overcome this issue without much hassle. The dropshipping fulfillment model is growing exponentially and is being used more and more by large catalog companies, auction sites, and savvy websites.

Increased Profit Margin

Dropshipping is the concept of selling a product that you don’t inventory or have direct control over. Your function as an online store is to list the product on your website. When your customer buys that product, you then turn to your dropship supplier (or drop shipper) and place the order.

The drop shipper is then responsible for fulfilling and shipping the order to your customer. You change your retail customer prices, and you purchase the product at a wholesale cost. The difference is your profit, minus any fees or expenses. 

Final Words:

You can see why this selling method is very attractive to those with little startup capital for inventory. It’s not necessary to pay for anything out of pocket until you’re paid by your customer first. You are also relieved of the fulfillment and shipping process. If blind drop shipping is an option provided by the wholesale supplier, then this is an added benefit.

Blind drop shipping is appropriately named because your wholesale supplier will place your business name and address as the “shipped from” address. This makes your customer unaware, or “blind”, that a third-party supplier was ever involved.   

There are definite advantages to drop shipping besides the obvious reasons mentioned above. Once you understand how this method works, the next step is to secure a supplier that is willing to establish a business relationship with you, especially if you’re a small business or sole proprietor.

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