Are you thinking about starting an ecommerce business, but you don’t exactly have the warehouse space to keep a large inventory? Or perhaps you’ve already got an online store up and running, but you’re finding it difficult to store or even manage your entire inventory. Whichever the case, one solution that you may want to consider is drop shipping.
In this article, we’ll be talking about this agile new type of ecommerce business model, how it works, and its benefits.
What is drop shipping?
Drop shipping enables a store to sell goods online without having to maintain, manage, or store an inventory. Instead, the store owner partners up with a supplier, which is known as a “drop ship supplier” in this context. This drop ship supplier handles all inventory-related tasks for the online business, from inventory management and storage to order repacking and fulfillment. In some cases, the drop ship supplier also manufactures the products being sold by the online business.
How does drop shipping work?
The following outlines how drop shipping works in practice:
- A customer orders a product from an online store using the drop shipping model.
- The online store receives the request and forwards the customer’s order and their shipping address to the drop ship supplier.
- The drop ship supplier receives the order and the customer’s shipping details. They repack the items stated in the order before shipping it off to be delivered to the customer.
Drop shipping isn’t just for startup ecommerce businesses, however. As mentioned, it can also be used by businesses with warehouses of their own but are struggling with inventory management problems. For these businesses, drop shipping will work in the same way. But instead of having to partner up with a supplier, they will instead have to employ an order fulfillment service and have that service manage their inventory.
It’s in this scenario that the choice of the order fulfillment service matters the most. This is because, as a business owner, you only want to entrust your inventory to a company that can provide the kind of order fulfillment services USA homeowners expect great results from, like Red Stag Fulfillment. By carefully selecting your order fulfillment service, you ensure that your inventory stays safe and your customers’ orders are efficiently and accurately packed.
What are the benefits of drop shipping?
There are many benefits to adopting drop shipping as a business solution besides having another company handle your inventory management and order fulfillment duties. Consider the following benefits and how they can augment your business:
It allows anyone to start selling online with minimal starting resources. When you start an ecommerce business with the drop shipping model, you can start selling online immediately, even with limited resources. All you need is a laptop, an internet connection, and a drop ship supplier willing to partner with you.
It reduces the cost of starting an ecommerce business. Because your inventory is being managed by another company, you won’t have to worry about overhead costs related to inventory management, such as paying for warehouse space and hiring warehouse staff.
It reduces the impact of inventory shrinkage to businesses. Inventory shrinkage is what happens when items in your inventory start to go missing without being sold. Since your inventory is being managed by another company with the resources and technology to secure it, you won’t have to worry about your stock being stolen or getting damaged by a natural calamity in your area.
It takes care of order fulfillment for you. One of the most labor-intensive processes of an ecommerce business is order fulfillment. By choosing to go with the drop shipping model, you are having another company fulfill your customers’ orders for you. This allows you to invest more time and energy marketing your products and attracting your customers.
It allows you to continue selling wherever you are. Having another company handle your product inventory and order fulfillment means that you can run your store virtually anywhere. All you have to do is to make sure that you are always responsive to your customers’ questions and requests, and stay on top of accepting orders and relaying them to your drop ship supplier.
Drop shipping: a cost-effective way of running an ecommerce business
Whether you’re already an established business owner looking for a way to solve your inventory management problems or an entrepreneur seeking to start an online store of your own, drop shipping may be the ecommerce solution you’ve been looking for. Just remember to choose the most reputable suppliers or order fulfillment services to ensure your business’s profitability for the long term.