Drop shipping is a great concept. But, how do you define the term? This is a concept that allows people (seller) to sell products without having to own the products to the customer. The fulfillment is done through drop shipping. The manufacturer or the wholesaler / distributor of the products will ship a single product directly to your customer (sometimes using your name). The seller does not have to worry about manufacturing, quality control, warehousing, shipping and etc. Let's delve in deeper on how to do business with drop shipping.
Arrangements vary with different drop shippers. Some will even ship the product for seller one at a time. Some will charge a fee for service separately. Others will include the fee into the wholesale cost of the items.
The concept of drop shipping is almost as old as the history manufacturing and distribution. Although there is no exact time period when drop shipping was first started, this concept gained momentum with the start of large size retail and manufacturing companies. Modern manufacturing with reduced inventory concept has brought an "on-demand" type of production. This has made drop shipping more popular. Retail market also gets similar benefits here with reduced inventory and risks to achieve higher cost savings
Besides the advantages, drop shipping also has its disadvantages.
1. You have to rely on your supplier to send the product to your customer on-time. You almost do not have control here.
2. Your profit margin is affected by the changes in wholesale pricing.
3. Not all drop shippers have the capability to track inventory and automate the ordering and shipment process.
4. The products might not be unique or special.
The greatest advantage of drop shipper for the retailer is that it enables the establishment of the business at low cost. It includes no cost in initial inventory as well as the cost to maintain stock such as warehousing, etc. The only thing you have to worry in business with drop shipping is promotional costs, such as marketing and advertising.
Drop shipping is used by and very popular among eBay sellers. They list the products on Ebay. When a buyer bids and wins the sale, the seller orders the product from the drop shipper who will send the product to the buyer's address. The money will go from the buyer to the seller and finally to the drop shipper.
On the final note, it is important to pay attention if you are searching for drop ship directory online. There are many sites offering drop ship directory with questionable content. They might be full of broken links, out of date drop shippers and companies that do not do drop ship and just middlemen. The site creators are more interested in your money than providing valuable information and maintaining legitimate business. The solution to this is not straight forward. You just need to be very careful. Here are some points to explore when you are selection drop ship directories: sample content (on the format and information), education (with topics including drop shipping, e-commerce, importation and FAQ), toll-free number, customer service and finally , guarantee.
Drop shipping is not readily available and not easy to find. It is important to connect up with a wholesaler who is willing to do drop shipping. Some drop shippers are very difficult to do business with. Beware of this as it can do damage to your business. It is therefore important to make the right connections.