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What is dropshipping?
Dropshipping is a supply chain management process in which the retailer does not keep goods in stock, but instead transfers customer orders and shipment details to Dropshipper, who then handle the shipping of the goods directly to the customer. The retailers make their profit on the difference between the wholesale and retail price.
The Benefits of Dropshipping
Dropshipping benefits everyone by dividing the workload. Each party gets a piece of the pie without having to do all the work on their own. Here are the main benefits of dropshipping:
- Zero Inventory: No needs for a physical location to house inventory, as you do not need to manage the inventory or shipping related issues. You pass on the orders to the dropshipper and they takes care of order fulfillment issues.
- Zero capital investment: Using drop shipping services offers great flexibility in terms of product range - promote a dozen items or promote a thousand!
- Sell Unlimited Products: With no inventory to maintain, you can expand your business and sell unlimited products without getting bogged down with inventory related issues.
Many established online merchants are now turning to dropshipping companies as a means of minimizing stock on hand, decreasing overall, overhead, warehousing, shipping costs and cutting down on delivery times to customers.
Dropshipping Advantages
There are many advantages to dropshipping, especially for new entrepreneurs.
Here are a few of the advantages:
- No experiences required to get started.
- Because there is virtually no financial investment required on your part, dropshipping is a low-risk business venture.
- Positive Cash-Flow.
- No inventory cost.
- No Office / Warehouse / Storage space related costs.
- Pay your supplier after customer pays you. No upfronting of money.
- Your supplier handle the inventory not you.
- No trips to the post office.
- No need to hire personnel for handling and shipping.
- Dropshippers handle order fullfillment and shipping, so you don’t have to.
- Being able to spend money on Marketing and not Products.
- offer a more competitive price.
- Dramatically reduce your inventory costs.
Drop Shipping considerations:
- Drop ship setup fees are minimal, in rare occasion are free.
- You can start a business with little or no 'out-of-pocket' expense.
- You don’t have to limit your product offerings.
- You can sell many different types of products.
- You can test the market by selling slecting items.
- Build your own unique online brand.
- Anyone can join.
- Connect with thousands of suppliers and sellers immediately.
Drop Sipping drawbacks you should consider:
- Exchange rates.
- International dropshipper have hight monthly fees.
- Internation dropshipper have one time fee.
- International dropshipper drop fees increase your expenses.
- International dropshipper don’t pay for Customs fees.
- International dropshipper don’t pay for taxes (GST and PST or QST).
- International dropshipper don’t pay to release your shipment at Borders.
- In some case you can’t save money by purchasing in bulk.
- Your supplier may run out of a hot-selling product.
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