The purpose of this article is to introduce you to drop shipping and ensure that you are familiar with what drop shipping is. You may have come across this term before but may not be aware of what drop shipping refers to or stands for. As a result of reading this article you will understand how drop shipping can benefit both you and your business.
What Is Drop Shipping?
Essentially drop shipping is a process which allows you to purchase a particular product from a wholesaler, the wholesaler will also ship the products directly to your customer. Thus freeing up the need to stock products within your own warehouse or store. In order for this to happen all you need to do is team‐up with a supplier within the desired industry and once you receive an order you pass the details onto your supplier and they will then deliver the product to you customer from their warehouse. For example, an ecommerce business will usually purchase stock from a supplier which could be in bulk or on an individual basis and then ship the product onto their customers. Whereas with the drop shipping model you will be selling products on behalf of your chosen wholesaler.
What Type Of Business Can Be Made Through Drop Shipping?
The hardest part of this process is finding your niche and which products will be worth your investment. Whilst deciding which product and range you should go for you would also need to consider the profit margins and whether or not you will benefit in the long run. A huge benefit of drop shipping is that you do not have to worry about physically stocking the products and delivery.
Finding the perfect product niche is essential for perfecting this process, there are two vital considerations which you must take into account which are:
Niche ‐ Finding a niche is the first decision in your drop shipping journey, choosing a product you are already familiar with could be particularly advantageous when it comes to selling the product. By focusing on a specific niche will not only allow you to define your market but it can quickly make you a specialist stockist within your chosen sector. If you fail to define your product range and choose your product of a whim you are more likely to fail, if your product is already in the market and selling under a reputable brand you will run the risk of losing potential customers to the more established businesses in your sector.
Price – Once you have decided on your product range the next step in your drop shipping journey is to consider is your pricing strategy. Do your research, your products must be priced competitively in order to sell, too high and your products won’t sell and too low you will seriously impact your profit margins.
Pros and Cons Of Drop Shipping
With all businesses there are pros and cons and drop shipping is now exception, below are a list of key factors to consider before your venture into drop shipping.
Save Money ‐ Drop shipping allows you to save money which can come in handy for you elsewhere. By using this method you do not have to pay for the stock or pay any warehouse renting fees. In addition to this any postage and packaging fees will also be avoided.
Reduced Level Of Risk – As you do not need to purchase any stock your start up costs will be decreased. The initial costs will largely revolve around your website and advertising.
Easy To Scale – Your sole focus will be on generating sales and you will not have to worry about getting the products delivered or how to go about packing them up without causing any damage to them as this will all be taken care of by the supplier.
Flexible Location – You have the benefit of being able to run your business from almost anywhere in the world. All you will need is an Internet connection to check the orders and a telephone to communicate with customers and suppliers.
Supplier Errors – As the wholesaler is responsible for shipping and the care of your product any issues surrounding quality control and delivery will be out of your hands. Although these issues are purely down to the supplier they will reflect on your business which could potentially impact on your business in a negative light.
Potential Low Profit Margins – You may find that you face stern competition when it comes to the products you are selling. Drop shipping is becoming increasingly popular so in order to compete your pricing strategy needs to stay competitive, a drop in price could significantly impact your profit margins.
By no means is drop shipping an easy way to make money but with the right strategy and planning drop shipping can be very rewarding with endless possibilities. So, if you’ve got a stellar business plan and you’re prepared to work hard you’ve got every reason to succeed throughout your drop shipping journey. Whatever you do – don’t spend a fortune on a new website; Shopify e-commerce websites are perfect for new (self-build) business start-up stores from as little as about £20 per month with a freee trial period.