What's dropshipping and how does it work? Is it really a valid supply chain management model? Can anyone use this system? The reality is that drop shipping is essentially a very simple process and an inexpensive entry point to purchasing and selling online.
The dropshipping financial model works as follows: a retailer finds a product from an organization that is happy to drop ship, and then lists that product on an online auction or an eCommerce website. The retailer, then, is in control of the marketing of that product and collecting the payment for it, but they're never really in possession of the item.
Here are the 1st 2 advantages of drop-shipping. Probably the most significant one is that you never need to stock the inventory yourself. What this means to you as the retailer is that you do not have a huge capitol investment obligation when you start your business - you do not have to get all your products up front. You simply list the item that the supplier is happy to drop ship and then collect the payment. And this is the second benefit of drop shipping: a positive cash flow cycle - meaning you receive the money before paying the provider for the product.
This brings us to the very next step of the drop shipping business sector model - collecting the payment and transferring the order. Once a customer has selected your product and made their payment (including the shipping costs) you then send the wholesale price and the delivery charge to the provider, along with the order for the product. The provider, then, is in command of accomplishment and will deliver the item to the customer. As is clear, the retailer is left with the difference in costs, without ever having to see, package, ship, or store the products.
The benefits from this step should additionally be obvious. Not having any inventory available yourself means you don't have to worry as much about sudden purchaser or market shifts. You can never get stuck with rooms full of outmoded hardware because you've never essentially bought any inventory. You've merely handled the payment and the order. The supplier is the person who handles the other parts of this supply chain equation.
And the part of the equation the drop shipper looks after is no little thing. Drop shipping frees up large amounts of your time that would normally be taken up with activities like stocking inventory, packing products, and standing in line after line after never-ending 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 stated.
Without the need of a warehouse or other location to store your products you'll cut back on your overhead costs, and without the requirement to buy stock in big amounts, you can minimize the hazards of overshooting projections and getting stuck with undesired product.
When you use the drop-shipping model you can use all this freed-up time to research your market and discover all the products that may perform the best for your business. Markets and industries vary all of the time, and a drop shipper will help you be sufficiently flexible to stay alongside of 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. Focus on a single product or become an one-stop-shop for a huge spread of high-demand items.
The products you offer will, of course, rely on the providers you'll be able to find. Some are bigger than others, but if you'd like to succeed at online selling, reliability is far more important that just size. As you start to get to the huge potential online, you must know you will be able to quickly and reliably fill consumer demand.
The dropshipping financial model works as follows: a retailer finds a product from an organization that is happy to drop ship, and then lists that product on an online auction or an eCommerce website. The retailer, then, is in control of the marketing of that product and collecting the payment for it, but they're never really in possession of the item.
Here are the 1st 2 advantages of drop-shipping. Probably the most significant one is that you never need to stock the inventory yourself. What this means to you as the retailer is that you do not have a huge capitol investment obligation when you start your business - you do not have to get all your products up front. You simply list the item that the supplier is happy to drop ship and then collect the payment. And this is the second benefit of drop shipping: a positive cash flow cycle - meaning you receive the money before paying the provider for the product.
This brings us to the very next step of the drop shipping business sector model - collecting the payment and transferring the order. Once a customer has selected your product and made their payment (including the shipping costs) you then send the wholesale price and the delivery charge to the provider, along with the order for the product. The provider, then, is in command of accomplishment and will deliver the item to the customer. As is clear, the retailer is left with the difference in costs, without ever having to see, package, ship, or store the products.
The benefits from this step should additionally be obvious. Not having any inventory available yourself means you don't have to worry as much about sudden purchaser or market shifts. You can never get stuck with rooms full of outmoded hardware because you've never essentially bought any inventory. You've merely handled the payment and the order. The supplier is the person who handles the other parts of this supply chain equation.
And the part of the equation the drop shipper looks after is no little thing. Drop shipping frees up large amounts of your time that would normally be taken up with activities like stocking inventory, packing products, and standing in line after line after never-ending 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 stated.
Without the need of a warehouse or other location to store your products you'll cut back on your overhead costs, and without the requirement to buy stock in big amounts, you can minimize the hazards of overshooting projections and getting stuck with undesired product.
When you use the drop-shipping model you can use all this freed-up time to research your market and discover all the products that may perform the best for your business. Markets and industries vary all of the time, and a drop shipper will help you be sufficiently flexible to stay alongside of 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. Focus on a single product or become an one-stop-shop for a huge spread of high-demand items.
The products you offer will, of course, rely on the providers you'll be able to find. Some are bigger than others, but if you'd like to succeed at online selling, reliability is far more important that just size. As you start to get to the huge potential online, you must know you will be able to quickly and reliably fill consumer 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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