If you are an online retailer trying to expand your offerings without any additional outlay for inventory, you really should examine the drop shipping business model as a way to do this. The drop shipping business design is just one where an entity (usually the manufacturer or wholesaler) makes a decision to allow retailers to acquire in quantities of less than one item at a time – and further allows the retailer to specific a shipping address for each order. For the retailer, this means you can provide the whole line of products of one or more manufacturers/wholesalers without ever investing a penny in additional inventory. So as opposed to being able to offer only a few “top selling” items, you can now offer many more items. It no more becomes important if an item sells very well or simply occasionally as its cost to you now is just a slow on your web store. There are no holding costs like when you inventory items.
Let’s take a look at what the Drop Shipping Website is and how it works. The easiest way to consider a drop ship business design is to think about your personal retail internet based or mail order business. In lots of ways they work the same. Your order with payment is available in, is processed and then shipped for the purchaser. In both your retail environment as well as in the drop ship environment, the person getting the package is the customer. The only real impact on the client is the fact that in the one instance, the merchandise is shipped directly from your local area and in another instance, the merchandise is shipped from another location.
Here is just how a drop ship program works mechanically. You develop a relationship having a drop ship company and integrate their offerings into your product catalog. You obtain your order out of your customer. Afterwards you log onto your account in the drop ship company and put an order along with them – supplying your customer’s address since the shipping address for the item. The drop ship company then packs and ships the product and updates their order system to show you once the package was shipped. That really will be the whole process. Your total time investment to do business with the drop ship clients are finding the time to get in orders to their order processing system. You don’t get involved with any packing or shipping.
Components of a good drop ship program – Drop ship companies vary widely in what they offer and how they operate their business. Things you want to find in a drop ship company are the following:
You want to find a company that always has their inventory available. There is nothing more frustrating in your customer rather than to place an order for something simply to be told it really is back ordered for 3 weeks. If the drop ship company does not keep a current inventory of its offerings constantly, you want to make sure they have a live updated inventory list which your catalog can be integrated using this inventory list to mark the proper status of each and every item. You want a company that ships fast. You don’t would like your customers waiting forever for their items so be sure that the drop ship company ships all orders quickly. Being a corollary, you want to obtain your orders in their mind quickly to ensure that there is no additional delay in shipping simply because you took a couple of days to inform them of an order.
You want to be certain the drop ship company guarantees delivery in the order. If a customer contacts one to report an order has never been delivered, you want to ensure yet another one gets shipped for them at no cost to you personally or even the customer. It could be that the drop ship company will require you to pay an insurance fee for this guarantee or it could be that they don’t. In either case, make sure to possess a 100% delivery guarantee promise from their store. You want to be sure that the company offers an simple to use order placement and status verification system. You should be able to use the internet to put your orders and verify if they have been shipped. You desire to make sure that the company does not include any of their very own literature/catalogs using the order and they tend not to have a subscriber list of your own customers. You work hard for your customers and you need to take advantage of the expense of acquiring those customers. You need to ensure that the pricing structure enables you to profit. Many drop ship companies will offer you discounts which are almost just like their wholesale rates plus some may even match their tier one wholesale rates.
So is definitely the drop ship business design the right way to expand your business? There are numerous factors to look at when deciding when a drop ship business structure suits your retail business. A lot of them happen to be discussed in the bullet points above but there are 2 other elements to check to make this decision. Is it degree of separation between you and your customers OK? Whenever you ship straight to your clients, you have the chance to include inserts with the order – catalogs, sale notices, etc. You are going to generally lose this ability when drop shipping. Does the charge structure meet your needs? Once you ship via this process, you will pay shipping charges and in some circumstances a per item/order drop ship fee. What you should examine is when the net profit structure is enough for you as soon as you subtract out your sum total from the order – including payments for the company and then any fees – like credit card processing fees – that xgmuaf incur. Also, you have to take into account that if you carry products from multiple companies, you may be paying shipping charges to multiple companies when a customer orders products that must be fulfilled from multiple places. This also will affect your profit per order.
By examining all of the elements above, it will be possible to decide in the event the drop ship business model suits your retail operation. Providing you take time to find and work together with reputable companies, it is a wonderful way to add to your product catalog and financial well being profit without any risk on your part. If you are considering expanding your small business operations this year, you ought to give this model a significant look prior to deciding to invest thousands in inventory that you should store and take a seat on until it moves.