Less upfront capital.
With the traditional form of stock reselling, you need to prepurchase stock in advance. Generally wholesalers require you to purchase a minimum quantity (normally at least 500 units) before they will even talk to you. Not only do need to pay for this in advance but you also need to work out storage of these units. The main issue here is your tied to this one stock line and have outlaid a significant amount of money to be able to sell it.
With drop shipping you don’t need to prepurchase stock; the only time you purchase stock is when a customer has already ordered a unit from you and paid. This means you can list items for sale that you currently do not have available freeing up your money so that you can use it in other areas.
Easy to get started.
Running an e-commerce businesses is so much easier than running a traditional brick and mortar store, especially when you do not need to deal with physical stock. With drop shipping you do not need to worry about:
- paying for inventory up front
- managing or storing inventory
- keeping track of inventory
- picking and packing of orders
- arranging shipping (both inbound and outbound)
- handling returns
- pre-ordering inventory in advance
Lower ongoing overheads.
As you are not physically holding inventory you do not need to worry about paying for extra overheads that do not directly produce revenue. Extra costs like warehousing, stock management and staff, are all unneeded costs that just reduce your bottom line. Many successful drop shipping businesses are even run from a home office with just a laptop and Internet connection.
No physical location.
The benefit of an online dropship businesses is that it can be run from just about anywhere as long as you have a laptop and Internet connection. Again as there is no physical stock as long as you can get in touch with suppliers you can effectively work from anywhere.
A larger range of inventory.
As you are not pre-purchasing stock or even holding it and the warehouse you can list a larger range of inventory for sale. As is a supplier stocks an item you can list it for sale to.
There are no limits.
As you are using other people’s resources (their inventory, their warehousing, their staff) you can continually grow as adding new product lines only costs a little bit of your time. This means you can concentrate more on marketing your store.
Although drop shipping is a great way to sell goods online there are some disadvantages as well. If you want to see some of the disadvantages associated with drop shipping, make sure you check out The disadvantages of drop shipping.