The digital world has brought about many revolutionary changes and there is perhaps no better example of this observation than e-commerce. This sector is continuing to grow by leaps and bounds; great news for those who are keen on becoming involved within such a potentially lucrative industry. As a result, several innovative processes are coming to light. One unique method for sales and distribution is known as drop shipping (sometimes referred to as "dropshipping").
Let's take a closer look at this concept in order to appreciate its importance.Drop Shipping at a GlanceThe basic principle behind this method is actually quite simple. As opposed to keeping physical stock of a product, the seller contacts a third party after a transaction has been made. The product is thereafter purchased by the seller and it is shipped directly to the buyer. In other words, the seller never physically handles what is being sold.
So, why is this method proving to be so very popular? Let us now examine its primary benefits.The Advantages of Drop ShippingMany will argue that the main benefit of drop shipping is that the seller will not need to purchase massive amounts of inventory in order to start an online e-commerce business. Less overhead equates to more flexibility and only a minimal capital investment. Some of the other major advantages include:
- Storage facilities are no longer required.
- Sellers are not concerned with packaging and shipping.
- It is not necessary to track inventory or constantly restock products.
Still, are there any possible drawbacks that you should be aware of?Potential DownsidesOne issue that some novice sellers may encounter is that it is much more difficult to keep track of inventory (as it is sourced and stocked within third-party warehouses). The shipping processes can be slightly more challenging; particularly if you are working in conjunction with two or more firms. Thus, your costs could also rise and these are normally translated to the customer. On a final note, drop shipping essentially signifies that you are trusting a supplier.
If this individual makes any errors, they will reflect poorly upon your business. This might lead to low levels of customer satisfaction and negative reviews even though (in theory) the fault was not your own.Is Drop Shipping Right for You?This will revolve around how much capital you are willing to invest and how willing you are to work together with other shipping providers. This is also one of the reasons why many who are new to the e-commerce industry choose to leverage the power of well-known portals such as Shopify. They provide a higher level of clarity, so the processes themselves are normally much easier to understand.
If you correctly leverage the power of drop shipping, the sky is the limit.