5 Reasons Why Drop Shipping Is Perfect For Home Business
All business platforms have negatives and positives. Dropshipping has its share of negatives, but the positives definitely outweigh the negatives. Here are 5 positive factors about dropshipping compared to running a business via traditional bulk buying and selling.
1. You have the ability to start an online store with very little inital investment. Every business needs money to start-up, however the low cost of domains, free ecommerce software and various methods of free promotion mean you can start selling products online using only a small sum of money.
2. You can spend more time promoting, less time packing. If you sell in the traditional way (buy in bulk and sell on) you will have to spend a certain amount of time on each order packaging the product up and then going to the post office. With dropshipping you visit the dropshippers website and place your order, this time saved can used to develop other areas of your business.
3. Access to a much greater range of products. If you buy and sell products the chances are you won’t have enough capital to buy all the products you want (this could be many hundreds of products) or you may not want to risk so much in case the products don’t sell. Dropshipping means you can use a range of dropshippers to sell a large range of products without increasing business risk.
4. You can run everything from home. When your business really starts to pick up you should still be able to run your business from home, you may need to start using your dining room instead of your bedroom but you still save a lot of money on moving into new premises like a traditional bulk buying business would.
5. You don’t have to deal with customer returns and warranties. The dropshipper has to look after returns, so when any customers wish to return a product you just have to notify the dropshipper and supply a refund once the product is returned. This saves a lot of time compared to if you had to inspect every return and then go about selling the product again or writing it off.
All of the benefits listed evolve around saving time and money, both of which reduce business risk.
Expand Product Selection with Drop Ship
drugstore.com, inc., (NASDAQ: DSCM) a leading online provider of health, beauty, vision, and pharmacy products, is launching a broader selection of products and new categories through the initiation of its drop ship program, a virtual inventory fulfillment system. The new e-commerce capability enables the rapid expansion of customer requested products that are more specialized, hard to find, larger in size or perishable.
“We are delighted to give our customers access to a wider variety of products through the launch of drop ship,” said Dawn Lepore, CEO, drugstore.com. “This is a win for customers and for the company because we can significantly expand our OTC product selection without taking on new inventory risk.”
The drugstore.com(TM) over-the-counter web store will grow from more than 30,000 products to more than 34,000 by the end of the year with drop ship. More than 400 of those new products are already available to customers this week. When an order is placed for a drop ship item, it will be shipped directly to the customer from the manufacturer or supplier.
“We are adding products that our millions of customers have requested and that are natural extensions of our current selection,” said Julie Johnston, vice president, OTC merchandising, drugstore.com. “For instance, we are now able to expand our increasingly popular gift category by offering gourmet food, gift baskets and unique games.”
Some of the thousands of new drop ship items customers will be able to buy as they become available this year include:
* Baby Gear - Strollers, car seats, joggers, cribs and furniture.
* Games - Wide selection of Board, electronic, Interactive CDs, strategy, and trivia games.
* Durable Medical Equipment - Wheelchairs, hearing aids, easy-lift chairs, walkers, scooters, hospital beds.
* Fitness Equipment - Exercise machines, tanning beds, massage tables.
* Kitchen Accessories, Small Appliances - Toasters, coffee makers, space heaters, fans.
* Specialty Electronics - Larger selection of air purifiers, weather stations.
* Gourmet Food and Gift Baskets - Hand-made Apple Pie delivered ready to bake, chocolate covered strawberries, specialty chocolates, special occasion selections and fresh fruit.
Customers can shop on www.drugstore.com 24 hours a day, seven days a week from the comfort and privacy of their own homes and have the benefit of home delivery. They can take advantage of many convenient features such as Auto Delivery for automatic delivery of items every 30, 45, 60, 90 or 180 days; Your List, which reminds customers what items they have previously purchased; and the FSA Store (flexible spending account) with more than 3,000 eligible products, FSA specific receipts for easy reimbursement, or FSA debit cards for automatic reimbursement. The FSA store features shopping guides, product comparisons, informative articles, and additional product content.
About drugstore.com, inc.
drugstore.com, inc. (NASDAQ: DSCM) is a leading online provider of health, beauty, vision, and pharmacy products. The drugstore.com[TM] online store (www.drugstore.com) provides a convenient, private, and informative shopping experience that encourages consumers to purchase products essential to healthy, everyday living. The online store offers thousands of brand-name personal health care products at competitive prices; a full-service, licensed retail pharmacy; and a wealth of health-related information, buying guides, and other tools designed to help consumers make informed purchasing decisions. Consumers can personalize their shopping experiences with shopping lists, e-mail reminders for replenishing regularly used products, and private e-mail access to pharmacists for questions.
drugstore.com, inc. has been awarded the Verified Internet Pharmacy Practice Sites (VIPPS) certification by the National Association of Boards of Pharmacy (NABP) as a fully licensed facility exercising competent, safe pharmacy practices in compliance with federal and state laws and regulations.
Doba Unveils New Drop-shipping Program
Online retailers that have sales between $1 million and $20 million now have access to a new drop-shipping program designed by Orem-based Doba, a provider of Web-based inventory on-demand platforms that streamline the process economically.
According to Doba CEO Blaine Nielsen, most online retailers in this price category do not have an easy software platform they can use without it having to be custom made for them, which typically has a high cost associated with it.
“There’s a huge need for the SMB (small- to medium-sized business) retailer to have drop-shipping software,” Nielsen said. “So we went about trying to build the additional functionality, above and beyond our current technology, of what they would need to support their online operations.”
Doba currently has an inventory on demand platform designed to solve the major pain points with inventory management for small online business retailers. The platform is the technology infrastructure to support a virtual warehouse and fulfillment system as well as relationships with hundreds of suppliers. These suppliers are able to drop-ship their inventory of products on behalf of retailers directly to end customers.
The new program is focused around drop-shipping, which works well in an online space. Drop-shipping allows the product to stay at the manufacturer or distributor and not get shipped to the retailer. Rather, it is shipped to the end customer after the retailer takes an order. According to Nielsen, what online retailers want, however, is for the products to have their brand associated with them. Doba’s new programs allow for that added functionality and allow the online retailer to track high volumes at one time instead of having to check orders manually, one at a time.
“A retailer that is doing $1 million to $20 million in sales per year wants their own presence,” Nielsen said. “So there is every-thing from getting their brand on the packing slip to making sure that the end consumer knows its coming from them. With that kind of volume we have to put more automation into place. They want it fully scaled, tied into their front-end Web store. We provide an API back to our service so they can make that fully automated. The main changes are complete transparency and visibility throughout the order life cycle process - the ability to see hundreds of orders on one screen instead of manually seeing one at a time. The core of our business is very similar, it’s just making some interface enhancements, some more automation to make it something that is very usable in online retailers eyes.”
Doba, which has been one of the fastest-growing companies in the country for the past few years - this year placing 23rd on the Inc. 500 list, No. 6 on the Deloitte Technology Fast 500 and first on the MountainWest Capital Network’s Utah 100, saw developing the new program for larger online retailers as a new way to continue its growth pattern.
“There are tens of thousands of online retailers across the United States that do over $1 million in online sales, so we want to support that growing industry. That’s where we want our business to be,” Nielsen said. “This is a new product that we expect to be our next growth vehicle. We have had a tremendous amount of growth working with people who are starting online businesses and we fully continue to support that as a product. We look at this to help us to continue to grow.”
To create the new SMB business model for drop-shipping for the online retailer in the higher-revenue category, Doba created a new division within the company to both create and manage the program and take care of the businesses that sign on to use it.
“Drop-shipping is a tremendous trend that we’re trying to follow and grow with it. It’s become available to smaller retailers and we’re making the tools to manage drop-shipping just as available and at their fingertips as the larger retailers, such as a Target or a WalMart, but at a fraction of the cost,” Nielsen said. “Many online retailers have tried to manage drop-shipping with one or two vendors; it just takes a lot of time and energy. Many people have built tools internally, which are custom builds, which are expensive to do. This is a systematic version of many of those things. What our software manages is the retailers ability to manage what is in inventory and know the orders and track information.”
The new drop-shipping interface model was introduced to the industry earlier in June by Doba co-founder and chairman Jeremy Hanks at the 2008 Internet Retailer Conference & Exhibition in Chicago.
“Now we support both direct and brokered supplier relationships, which means retailers can pay suppliers directly and use all of our data aggregation, order management, catalog updates and more,” Hanks said. “Or they can order through us acting as a broker on their behalf. Either way, retailers benefit from our evolving platform and supplier aggregation.”
A Drop-Shipping Plan: More Options
Drugstore.com has been providing customers with a broader selection of products, and new categories themselves, since last April, when it launched a “drop -ship” program–a virtual inventory fulfillment system. The e-commerce capability enables the rapid expansion of customer-requested products that are more specialized, more difficult to obtain, larger or more perishable than other items.
“Customers have access to a wider variety of products through drop shipments,” says president, chief executive officer and chairman Dawn Lepore. “This has been a win for customers and a win for the company because we can significantly expand our over-the-counter product selection without taking on new inventory risk.” Drugstore.com’s O-T-C Web store has expanded from about 30,000 products to over 35,000 items since the debut of drop shipment. When an order is placed for a drop-ship item, it is shipped directly to the customer from the manufacturer or supplier.
“We have added products that our millions of customers have requested,” notes vice president of O-T-C merchandising Julie Johnston, who adds that drugstore.com has been able to expand its popular gift category by offering gourmet food, gift baskets and unique games.
Among the thousands of new drop-ship items customers have been able to purchase are strollers, car seats, cribs and other baby gear; such durable equipment as wheelchairs, easy-lift chairs and walkers; and toasters, coffee makers, space heaters and other kitchen accessories and small appliances.
The positive impact of drop shipment has been observed in a number of areas, particularly seasonal items. For example, in late September drugstore.com debuted Halloween costumes on its web site, resulting in significant orders and revenues for the drop-ship orders.
How to Incorporate Drop Shipping - Part 2
Saving 40 minutes in shipping
A single visit to the United States Postal Service can easily eat up 40 minutes of your day. An average round trip takes 30 minutes or more, at least for me, and you may have to wait in line for 5 to 20 minutes, depending on how busy your local post office is and how few clerks are working the counters.
Your post office may have a self-serve counter where you can weigh your package, input the dimensions, and pay at a machine that calculates the postage for you, but that’s still a 5- to 10-minute job assuming you don’t have to wait in line to use the self-serve machine.
With drop shipping, you slash your shipping time from 40 minutes to nothing when you place your order. The supplier ships the package for you.
Admittedly, you can minimize the traditional shipping time expense by packaging and shipping multiple items on a single trip to the post office, but with some wholesale drop shippers, you simply input the addresses into your account, and you’re done.
Calculating your total savings in time and money
By incorporating drop shipping into your online business, you just saved 55 minutes and slashed your operating expenses. Let’s break it down to demonstrate precisely how much you stand to save in terms of money:
$2.00 in packaging materials, on average (envelopes, boxes, peanuts, bubble wrap, tape)
$1.33 in fuel (assuming 30 mpg, regular gas at about $4.00/gallon, a round trip of 10 miles, not including insurance and maintenance costs of your vehicle)
$7.38 in hourly pay (assuming 55 minutes saved at minimum wage of $8.05/hour)
Do the math, and you realize that drop shipping just saved you $10.71 processing a single item. And that’s what you save if you use very conservative estimates. Just think how much you stand to save if you typically earn $25/hour or $50/hour or $100/hour!
Using a supplier that accepts dropshipping orders, you can slash your costs both in time and money, freeing up resources to invest in market research, networking, managing and growing your business, or just kicking back to enjoy your additional free time.
But to me, drop shipping isn’t just about the time and money I save. The truth is I absolutely HATE packaging, addressing, and shipping. Drop shipping is more about preserving my sanity. Instead of having to focus on menial, unrewarding tasks that I find annoyingly boring, I can focus on the more stimulating and satisfying aspects of running and growing my online business. Drop shipping is the less stress, less hassle way of merchandising online.
How to Incorporate Drop Shipping - Part 1
Let’s demonstrate how you can incorporate drop shipping into your current online business to save 55 minutes on the following tasks:
* Prepare the item description
* Package and address the item
* Ship the item
You also save money:
* Your hourly rate for performing these tasks
* Packaging materials
* Shipping costs
* Mileage to the post office
Let’s do the math.
Saving 12 minutes preparing the item description
I’m a bit of a perfectionist, so I spend at least 30 minutes snapping and editing photos for a single item. I almost always use multiple images in my item descriptions. Subtract 15 minutes for perfectionism, and let’s conservatively estimate that the average seller spends 15 minutes preparing and uploading pictures for an item description.
With drop shipping you can use the supplier’s images—typically higher quality than the homespun variety, and they require no time investment on your part. You can trim at least 12 minutes off your time investment for taking pictures, editing images, and uploading them to eBay or a third-party image hosting service. As an added bonus, you get a higher quality image.
Some drop shipping service providers offer “hot linking” to the supplier images so you don’t have to do any saving or uploading. I have personally trimmed my time investment on photos from 30 minutes to 30 seconds using hot links to supplier images!
Furthermore, in most cases the supplier provides an item description for you which again saves you more time. Since many sellers like to add to or rewrite the item description, we won’t include this time saver in our calculation.
Saving 3 minutes in packaging
Traditional packaging time varies. For a small item that fits in an envelope, you can address the envelope, slip the item into it, and seal it in less than a minute. Larger, bulkier, more fragile items can take even a seasoned packer 10 to 15 minutes to properly package and address. Let’s make a conservative estimate of 5 minutes to package and address an average item following the traditional model.
How much time can you save in packaging with drop shipping? Oh, wait a minute… you don’t have to worry about packaging! You simply place the order online, and the drop shipper packages the item for you. So, that’s 5 minutes minus about 2 minutes for placing the order online for a total savings of about 3 minutes.
The Real Value of Drop Shipping
Many retailers agree that drop shipping, used properly, is a significant time and labor saver. But is it a money saver as well? It is often said that time is money. But just what is the true value of drop shipping?
The value of time is different for everybody. For Bill Gates, an hour of his time is so valuable you probably wouldn’t ever be able to pay him enough for his time.
Sometimes interns work without pay. What does the intern consider to be the value of their time? They are giving of their time, and getting no money in return. They consider their pay not as a present monetary figure, but as experience gained, which will in turn makes them more valuable to other companies. Thus it could be said that an intern is considering the value of their time as something that will be paid off in the future.
If I were to invest in the stock market, I would probably spend a good amount of time researching various stocks before deciding on what to invest my money in. I would then wait for a (perhaps very long) period of time before cashing out my stocks.
In such a case, I’m investing my time in the hopes of getting a future payoff for it. If I consider my time to be worth $50/hour, then my goal would be to get a $50 future return for every hour I spend doing research.
When using drop shipping sources to run part or all of your retail business, you save time by having somebody else track inventory as well as pull and package orders. Additionally, you don’t spend any time running to the post office to have orders shipped.
As an online merchant, you’re well aware of how much time and money you spend preparing an item description and packaging and shipping products. By following the traditional auction model, you actually spend more in time and money to deliver less merchandise. With product drop shipping, you can significantly increase productivity, slash costs, and boost your bottom line.