In case you are a web retailer looking to expand your offerings with no additional outlay for inventory, you really should examine the drop shipping business model as a way to do this. The drop shipping business structure is one where an entity (generally the manufacturer or wholesaler) makes a decision to allow retailers to acquire in quantities of as little as one item at a time – and additional allows the retailer to specific a shipping address for each order. For the retailer, which means you can offer the whole line of products of one or more manufacturers/wholesalers without ever investing a cent in additional inventory. So instead of being able to offer just a couple “top selling” items, you can now offer many more items. It no longer 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 check out exactly what the Shopify is and the way it works. The simplest way to consider a drop ship business structure is to take into account your own retail online or mail order business. In many ways they work the identical. An order with payment comes in, is processed and then shipped to the purchaser. In both your retail environment and in the drop ship environment, anyone finding the package is your customer. The only real impact on the client is that within the one instance, the item is shipped directly from your location and in another instance, the product is shipped from another location.
The following is how a drop ship program works mechanically. You establish a relationship with a drop ship company and integrate their offerings in your product catalog. You get your order out of your customer. You then log onto your bank account in the drop ship company and place an order along with them – supplying your customer’s address because the shipping address for that item. The drop ship company then packs and ships the product and updates their order system to show you if the package was shipped. That really is definitely the whole process. Your total time investment to work with the drop ship company is finding the time to get into orders into their order processing system. You don’t get involved in any packing or shipping.
Elements of an excellent drop ship program – Drop ship companies vary widely in what they feature and exactly how they operate their business. Things you want to find in a drop ship company range from the following:
You would like to look for a company that always has their inventory in store. There is nothing more frustrating for your customer rather than to make an order for something only to be told it is back ordered for three weeks. When the drop ship company will not have a current inventory of all its offerings on a regular basis, you need to be sure there is a real time updated inventory list which your catalog can be integrated with this inventory list to mark the appropriate status of every item. You want a company that ships fast. You don’t would like your customers waiting forever for his or her items so make certain that the drop ship company ships all orders quickly. As a corollary, you would like to obtain your orders for them quickly so that there is absolutely no additional delay in shipping since you took several days to inform them of an order.
You need to be sure the drop ship company guarantees delivery from the order. In case a customer contacts one to report an order has never been delivered, you would like to be certain a different one gets shipped to them at no charge to you or even the customer. It may be that this drop ship company will require that you pay an insurance fee with this guarantee or it may be that they don’t. Either way, make sure to use a 100% delivery guarantee promise from them. You would like to make sure that the organization provides an simple to use order placement and status verification system. You must be able to search online to place your orders and verify when they have been shipped. You want to make sure that the organization will not include any of their own literature/catalogs using the order and they do not keep a email list of the customers. You work tirelessly for your customers and you should gain benefit from the cost of acquiring those customers. You would like to ensure that the pricing structure allows you to profit. Many drop ship companies are able to offer discounts which are almost just like their wholesale rates and a few may even match their tier one wholesale rates.
So is definitely the drop ship business structure the correct way for you to expand your business? There are many factors to look at when deciding if a drop ship business design is right for your retail business. Most of them have been discussed inside the bullet points above but there are two other elements to look at in making this decision. Is that this level of separation between both you and your customers OK? When you ship directly to your customers, you will find the possibility to include inserts using the order – catalogs, sale notices, etc. You are going to generally lose this ability when drop shipping. Does the charge structure work for you? Whenever you ship via this method, you are going to pay shipping charges and occasionally a per item/order drop ship fee. What you need to examine is when the net profit structure is sufficient for you once you subtract out the total price in the order – including payments towards the company as well as any fees – like credit card processing fees – that xgmuaf incur. Also, you should take into account that if you carry products from multiple companies, you may be paying shipping charges to multiple companies if a customer orders products that must definitely be fulfilled from multiple places. This will affect your profit per order.
By examining all of the elements above, it will be possible to determine when the drop ship business model is right for your retail operation. Providing you take time to find and work together with reputable companies, it is actually 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 company operations this season, you need to give this model a serious look before you invest thousands in inventory that you should store and sit on until it moves.