In case you are an internet retailer looking to expand your offerings with no additional outlay for inventory, you really should examine the drop shipping business design as a way to do this. The drop shipping business design is one where an entity (generally the manufacturer or wholesaler) makes a decision to enable retailers to buy in quantities of as low as one item at a time – and further allows the retailer to specific a shipping address for each order. For the retailer, this means you can offer the whole line of products of one or more manufacturers/wholesalers without ever investing a penny in additional inventory. So rather than being able to offer just a few “best selling” items, you can now offer much more items. It no more becomes important if an item sells really well or just occasionally as its cost to you now is just a slow on your web store. You can find no holding costs like when you inventory items.
Let’s take a look at just what the Dropshipping is and how it works. The easiest way to consider a drop ship business model is to consider your personal retail online or mail order business. In many ways they work exactly the same. An order with payment is available in, is processed and after that shipped to the purchaser. In both your retail environment and in the drop ship environment, the individual receiving the package is the customer. The sole difference to the consumer is that within the one instance, the merchandise is shipped straight from where you are and in one other instance, the item is shipped from another location.
The following is the way a drop ship program works mechanically. You establish a relationship having a drop ship company and integrate their offerings to your product catalog. You receive an order from the customer. Then you log onto your money in the drop ship company and set the order along with them – supplying your customer’s address since the shipping address for your item. The drop ship company then packs and ships the piece and updates their order system to show you if the package was shipped. That truly is definitely the whole process. Your total time investment to do business with the drop ship clients are finding the time to get into orders within their order processing system. You don’t get involved with any packing or shipping.
Elements of a good drop ship program – Drop ship companies vary widely in what they provide and just how they operate their business. Things you need to find in a drop ship company include the following:
You would like to locate a company that always has their inventory in stock. There is nothing more frustrating to your customer rather than make an order for something just to be told it really is back ordered for three weeks. When the drop ship company does not keep a current inventory of its offerings all the time, you would like to be sure there is a real-time updated inventory list and that your catalog can be integrated using this inventory list to mark the appropriate status of each and every item. You will want company that ships fast. You don’t would like customers waiting forever for items so be sure that the drop ship company ships all orders quickly. Being a corollary, you need to get your orders to them quickly to ensure that there is no additional delay in shipping because you took several days to tell them of an order.
You need to be sure the drop ship company guarantees delivery of the order. If a customer contacts you to report the transaction has never been delivered, you would like to be sure a different one gets shipped to them at no charge to you or the customer. It might be that this drop ship company will require you to pay an insurance fee for this guarantee or it could be which they don’t. In either case, be sure you use a 100% delivery guarantee promise from them. You desire to make certain that the business provides an simple to use order placement and status verification system. You should be able to use the internet to place your orders and verify when they have been shipped. You would like to make certain that the business fails to include any of their own literature/catalogs with all the order and that they tend not to have a mailing list of your customers. You work hard for the customers and you should benefit from the cost of acquiring those customers. You need to make sure the pricing structure lets you profit. Many drop ship companies will offer you discounts that are almost as effective as their wholesale rates plus some may even match their tier one wholesale rates.
So is definitely the drop ship business model the correct technique to expand your company? There are numerous factors to look at when deciding in case a drop ship business structure is right for your retail business. Many of them have already been discussed inside the bullet points above but there are two other elements to check for making this decision. Is it degree of separation between you and your customers OK? Once you ship straight to your prospects, you will have the chance to include inserts using the order – catalogs, sale notices, etc. You may generally lose this ability when drop shipping. Does the charge structure meet your needs? Whenever you ship via this method, you may pay shipping charges and in some circumstances a per item/order drop ship fee. What you ought to examine is that if the profit structure is plenty for you when you subtract out the total cost in the order – including payments towards the company and any fees – like credit card processing fees – that xgmuaf incur. Also, you need to take into account that in the event you carry products from multiple companies, you may be paying shipping charges to multiple companies when a customer orders products that must definitely be fulfilled from multiple places. This too will affect your profit per order.
By examining all the elements above, it is possible to decide in the event the drop ship business design is right for your retail operation. So long as you take time to find and work together with reputable companies, it is actually a terrific way to add to your product catalog and main point here profit without risk from you. In case you are considering expanding your business operations this coming year, you should give this model a severe look before you decide to invest thousands in inventory that you need to store and sit down on until it moves.