Success in business is all about conceiving smart, new ideas, and their simple, perfect execution. Even the common trading methods, when applied in e-commerce, have been very popular and rewarding because of the virtual nature of e-commerce.
Drop shipping is one such business model that has been in practice for long, but lately, since its application through the internet, it has rocked the senses of e-commerce. This simple phenomenon of drop shipment is vastly important, effective, and beneficial both for consumers and traders in the global scenario of e-commerce.
Drop Shipping: Optimum Supply Chain Management
Drop shipping is an interesting and exciting supply chain management tool which involves the supply of goods from wholesalers or manufacturers to consumers via retailers. In this process, retailers are free to sell anything they can find to sell without owning or keeping a single stock item.
As a return for his troubles, retailers enjoy the difference between wholesale and retail price whereas, the actual seller ends up selling goods to the customer he would never have approached without the retailer. Though it may seem that the buyer perhaps gets overcharged in drop shipping that’s not so because he only pays the retail price which he would have paid anyway.
As it is not easier for consumers to deal directly with manufacturers because of their small quantity purchase and manufacturers, on the other hand, are already overburdened with production cost and management, they both need a connecting medium i.e. retailers; hence the drop shipping.
Triangular Aspect of Drop-Shipping
The triangular (buyer-retailer-seller) aspect of drop shipping makes it somewhat similar to consignment or agency business but it is not because of the unbinding nature of the relationship between retailer and seller. Retailers do not get any commission on sales nor do they require to keep possession of the drop shipping inventory.
In online trading, retailers do however put up their website to showcase the products they trade including information about them as well as pricing and shipment offers. When a buyer places the order, the particulars regarding the order and its delivery are submitted by the retailer to the wholesaler or manufacturer who then packs and ships the goods to complete the transaction.
The disclosure of the sender’s address on the shipment depends upon the arrangement between the retailer and seller. Either it may not at all be disclosed to conceal the production source or it can be arranged to provide a private or customized retailer’s address including his title and logo etc.
Drop-Shipping Good for Retailers
Indeed, drop shipping functions best in the retailers’ interest as it provides them with a low budget business opportunity. But from the business point of view, the best advantage of drop shipping is the minimum risk attached to it. The retailers do not have to invest in inventory, storage, packaging, or shipment as they just have to act as a bridge between buyers and sellers.
Drop shipping provides ambitious individuals and small businesses with an ideal opportunity to excel in e-commerce in the safest possible way by dealing with unlimited wholesalers, manufactures, and consumers without breaking a sweat.
Benefits of Drop-Shipping to Business
Drop shipping is a new type of product sourcing business that enables retailers and wholesalers alike to collect the payment before the product is fully purchased. The benefits of this business are very obvious and here we discuss these benefits and see if drop shipping would be the solution to your business.
One of the great benefits of this business is time. Drop shipping helps you save more time and money in the process. There would be no need for wholesalers to store, manage, and do inventory on every product done since the merchandise is sent directly from the wholesaler to the retailer.
There would be no hassles when it comes to storing the merchandise and having it labeled and managed during shipment and there would be no need for extra manpower since the entire merchandise is straight from the source. Time and cost are indeed valued in this business.
Risks involving time and money are minimal. In drop shipping, the transaction is not done until payment is not made and the product is not delivered until done otherwise. With this, you only pay for the shipment cost and have the profit all to yourself since the customer is paying the entire package. This type of transaction also allows windows of opportunity to sell new products as well as upgrade new ones at any time you see fit to do so.
It is already known that drop shipping is a very practical approach to solve a very tiresome and time-consuming job of handling shipments and order products. Although you can save time this should be taken into consideration that you do have the luxury of time, this should be well spent on building on the business and how to expand the horizon of the business more.