If you are a web retailer looking to expand your offerings with no additional outlay for inventory, you should examine the drop shipping business model as a way to do this. The drop shipping business structure is just one where an entity (generally the manufacturer or wholesaler) makes a decision to allow retailers to acquire in quantities of as low as 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 entire line of products of one or more manufacturers/wholesalers without ever investing a cent in additional inventory. So instead of being able to offer only a few “top selling” items, you can now offer a lot more items. It will no longer becomes important if an item sells really 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 have a look at exactly what the Drop Shipping Website is and how it works. The easiest way to take into account a drop ship business design is to think about your personal retail online or mail order business. In lots of ways they work the same. Your order with payment comes in, is processed and after that shipped for the purchaser. In both your retail environment and in the drop ship environment, the individual getting the package is your customer. The only real difference to the customer is that inside the one instance, the item is shipped directly from where you are and then in another instance, the merchandise is shipped from another location.
Is how a drop ship program works mechanically. You establish a relationship using a drop ship company and integrate their offerings to your product catalog. You get an order from the customer. You then visit your bank account on the drop ship company and set the transaction together – supplying your customer’s address since the shipping address for the item. The drop ship company then packs and ships the item and updates their order system to show you when the package was shipped. That actually is definitely the whole process. Your total time investment to work alongside the drop ship clients are making the effort to get into orders to their order processing system. You don’t get involved in any packing or shipping.
Components of a good drop ship program – Drop ship companies vary widely as to what they feature and how they operate their business. Things you need to find in a drop ship company are the following:
You want to look for a company that always has their inventory available. There is certainly nothing more frustrating for your customer than to place an order for something only to be told it is actually back ordered for three weeks. If the drop ship company fails to keep a current inventory of all its offerings all the time, you need to make sure these people have a real time updated inventory list which your catalog can be integrated with this inventory list to mark the correct status of each item. You want a company that ships fast. You don’t would like your customers waiting forever for their items so make certain that the drop ship company ships all orders quickly. As being a corollary, you want to get the orders to them quickly to ensure that there is no additional delay in shipping simply because you took several days to inform them of an order.
You want to be sure the drop ship company guarantees delivery from the order. In case a customer contacts you to report the order has never been delivered, you want to ensure yet another one gets shipped in their mind at no charge to you or the customer. It might be the drop ship company will require you to pay an insurance fee with this guarantee or it may be they don’t. In either case, be sure you possess a 100% delivery guarantee promise from their website. You want to be sure that the organization offers an user friendly order placement and status verification system. You must be able to use the internet to place your orders and verify when they have been shipped. You want to make certain that the company does not include any of their own literature/catalogs using the order and that they usually do not maintain a mailing list of your own customers. You strive for the customers and you should take advantage of the expense of acquiring those customers. You want to make sure the pricing structure enables you to profit. Many drop ship companies will offer you discounts which can be almost as good as their wholesale rates plus some can even match their tier one wholesale rates.
So will be the drop ship business structure the best technique to expand your business? There are numerous factors to look at when deciding if a drop ship business structure suits your retail business. Many of them have already been discussed in the bullet points above but there are two other factors to look at for making this decision. Is that this amount of separation between you and your customers OK? Once you ship straight to your customers, you have the chance to include inserts using the order – catalogs, sale notices, etc. You will generally lose this ability when drop shipping. Does the fee structure meet your needs? Once you ship via this method, you will pay shipping charges and in some circumstances a per item/order drop ship fee. What you ought to examine is when the gain structure is enough for you personally when you subtract out your total cost in the order – including payments towards the company and any fees – like credit card processing fees – that xgmuaf incur. Also, you have to take into account that in the event you carry products from multiple companies, you will be paying shipping charges to multiple companies in case a customer orders products that really must be fulfilled from multiple places. This also will affect your profit per order.
By examining each of the elements above, it will be possible to decide when the drop ship business structure suits your retail operation. Providing you spend some time to find and work with reputable companies, it is a great way to put in your product catalog and financial well being profit without risk on your part. If you are thinking of expanding your company operations this year, you need to give this model a serious look before you decide to invest thousands in inventory that you should store and sit on until it moves.