What is Drop shipping?
Drop shipping is a simple concept of selling a product. When an order is placed by a customer, the retailer passes on the customers order information to the wholesaler or supplier who then packages and ship the product to the customer. This method minimizes the risk for you, as a retailer, because you don't need to purchase the product until it is sold. Suppliers take care of the warehousing, packing, and shipping products, saving you a great deal of money.
How does it work?
Drop shipping method is acted by the supplier, retailer and the consumer. In the traditional business design, the retailers will order products from the supplier or manufacturer and is obliged to stock products in the warehouse. The retailer then has the function to promote and advertise the product and when another retailer or an end user orders from it, it gets its supply from its own inventory. In drop shipping the supplier has the function to create the product and store it for itself. The retailer does not have to get the product from the supplier or the manufacturer but is focused only in the marketing strategy and advertising of the product.
- Firstly you open a web store with a shopping cart and accept credit card on your site.
- You find manufacturer or supplier who could drop ship the product.
- You open an account with the drop shippers you choose.
- You receive product images and information from the supplier and upload them on your web store.
- When an order is placed on your web store by a customer, your store charges them through credit card including shipping fees.
- You then contact the supplier via phone or email sharing the customer's order, name and address.
- Once order information shared with your supplier, they will pack and ship the product to your customer.
- The drop shipper charges you the wholesale price including shipping fee. You have already passed the shipping charge on to your customer, so the shipping costs you nothing.
If you are a retailer with no upfront cost in turn allows you make more profit. With this method there is no need to have an in-house order management and inventory management system, nor you need to pay for the inventory upfront- if the product doesn't sell, you never have to buy it. Also, no packing, labeling and shipping cost applied, not there is a need to built a shipping management system. You purchase products at wholesale price and set your own retail price.
Whether you looking to expand your retail business over the internet or just looking for supplemental income, dropshipping business can be for you.