Drop Shipping: What Is It and Why Should I Use It?
“Drop shipping” is a pretty serious buzz word these days amongst those wishing to start a new online store or those hoping to make some money on eBay.
But what is drop shipping, and why are people so interested in it?
The quick definition is that drop shipping is a supply-chain management system in which a manufacturer or wholesale supplier maintains and inventory of products that retailers are allowed to sell. The retailer does not order any products until they complete a sale. At that point, the retailer orders the product from the supplier, who then ships the product directly to the end consumer.
The excitement over drop shipping, as well as its advantages, become clear at this point. The retailer has no upfront “cost-of-goods sold” expenses. They only purchase products after they make a sale.
After making the sale and getting paid by their customer, the retailer pays the wholesale price to the supplier, who packages and ships the product direct to the retailer’s customer, and the retailer keeps the difference between what they were paid and the wholesale price (i.e. the profit).
If you’ve been looking to start an online retail store and this is the first you’ve heard of drop shipping, your head is probably buzzing with the possibilities of the drop ship model.
But before you jump in, browse around this site for awhile, maybe check out some drop shipper reviews. Many retailers have failed trying to get involved with drop shipping because they jumped in before getting a full knowledge of it. Don’t make the same mistake.
Contrary to popular belief, drop shipping is not for everybody. Get knowledgeable, be smart, then if you decide it is for you, you’ll be better prepared to implement a successful drop ship program.