When it comes to starting up your own business the easier it is to get your products in the hands of the customer, the better for your company. For small business owners and entrepreneurs one of the biggest obstacles to overcome is streamlining your shipping process until it is the model of efficiency.
Fortunately, there is a method which has been in use for years that is highly popular and offers businesses of all sizes the ability to ship items quickly and efficiently without ever having to touch the product in the process. Drop shipping is considered one of, if not the best way for many types of businesses to ship goods to consumers.
What is Drop Shipping?
Basically, this is where the item which the customer orders from your store is shipped by a third party instead of from you. This means that the retail business does not have to stock any of the products in their location they simply have the item shipped from a third party which often is a wholesaler or even the manufacturer.
Benefits & Costs of the Drop Shop Model
There are considerable advantages to this approach, particularly for businesses that have little to no storage for stocking products.
Simple Setup: For those who run a business online, it is a snap to set up your drop shipping model as many wholesalers and manufactures have this option for their clients. This way, you don’t have to worry about packing, shipping, or tracking orders. This is a major advantage for many businesses when they get started.
Less Money Upfront: Arguably the best advantage for the right drop shop model is that a business or entrepreneur is not spending many thousands of dollars in stocking the products upfront. Instead, they are only paying for the products once they have been ordered by the customer. This means very little money is required to start up this process.
Little Overhead: Because keeping inventory is so expensive, using the drop shipping model is but a fraction of the cost. In fact, many home businesses that are run from a computer often spend less than $100 a month for expenses when they get started.
The good news continues about using this particular model for your business, particularly because it can be scaled for your needs, you can choose from a wide variety of products and you can run your business from virtually any location. However, there are some issues with drop shipping that need attention.
Small Profits: In order to attract new customers you’ll need to have very low prices which mean that your profit margins will be quite small on each item.
Inventory & Shipping Issues: The one big disadvantage in ordering from other sources is that you don’t know if the item happens to be out of stock at that time. This can be problematic if you have a considerable number of orders that need to be fulfilled, but no stock in any of your sources to send. Or worse, having customers order multiple items that must come from multiple shippers which greatly increases shipping costs.
The right drop shipping model is sized to fit your business and finding the right one for your needs will save a great deal of time, effort and money.