Why drop shipping? According to a survey conducted by Parade Magazine, 85% of Internet users purchase products online. For 2015, online sales are expected to reach $347 billion. Now, what does that mean for you? It means that an increasing number of customers have gotten used to purchases arriving on their doorstep, which gives you the opportunity to harness all the possibilities drop shipping has to offer.
What is drop shipping?
Drop shipping is an offshoot of e-commerce, in which a manufacturer ships a product to a customer directly, rather than through a warehouse, distributor, or retailer. For example, receiving a product with Amazon packaging doesn’t mean the product went through Amazon’s facilities — many drop shippers will gladly use a client’s proprietary packaging.
Why Drop Shipping is becoming so popular?
The main advantage of drop shipping is that it shifts most of the risk to manufacturers, allowing retailers and other sellers to broaden their product lines without the added expense of buying and handling inventory. The benefits include:
- The cost of shipping (for both supplies and freight charges) shifts to the supplier.
- The cost of inventory shifts to the supplier, and the seller doesn’t have to pay for an item until it sells. This is especially beneficial when testing a new product line, since the seller no longer has to worry about the leftover inventory. In addition, the seller is able to avoid the costs of storing, handling, and insuring said inventory.
- Many suppliers provide their own marketing and catalog materials, allowing sellers to shift that cost as well.
- Most drop shippers require no minimum order, which gives sellers the opportunity to offer products with low volume, but high margin and profit. For most sellers, this also means the ability to offer customers a wider range of options than are typically possible with self-managed inventory.
- Sellers can leverage the power of multiple vendors by using the ability to easily transfer business as a negotiating tool.
Drop shipping has been greatly responsible for the boom in e-commerce business. However, drop shipping isn’t limited to e-commerce. Traditional sellers can combine drop shipping with their in-house supply chain, thereby broadening their options and increasing their profits.
What are the drawbacks?
Drop shipping can have a few drawbacks, so it’s important for sellers to weigh their options and make sure the pros outweigh the cons. Potential disadvantages include:
- Lack of control and visibility in respect to inventory, tracking, etc.
- Increased paperwork
- Logistical challenges with shipments that are filled partially in-house and partially through drop shipping
- Maintaining brand identity by making the drop shipment process invisible to customers
What tools are available for mitigating the drawbacks while capitalizing on the benefits?
Inventory management services, like those offered by QStock Inventory, eliminate the potential grievances that may arise in drop shipping. Want a quick preview of how we can help? Here are a few ways:
- Our product integrates with FedEx and UPS to manage your tracking numbers. It makes the visibility of tracking data absolutely seamless.
- You can choose a favorite vendor, and let QStock Inventory handle all of the details, selecting an arrangement that best suits each specific order.
- QStock Inventory takes the pain out of orders that contain both in-house shipments, as well as drop shipments from multiple vendors. Once you place the order, we do the rest, allowing you to focus on your business rather than the nitpicky details.
- With us, handling paperwork is no more labor intensive than clicking a button. Once you set things up, our process automates the execution so you don’t have to worry about it.
Drop shipping is a great way to maximize profits while reducing expenses. Unfortunately, too many businesses find drop shipping intimidating, especially if they will be maintaining their own inventory. If you’re tired of passing up the many benefits of drop shipping, but don’t know how to get started, give QStock Inventory a call today. We’ll make it easy.