Drop-shipping is a type of business model which enables a business to operate without the upfront purchase of inventory, and without the hassle of shipping.
How it works is that the retailer ( you ) partners up with a drop-ship supplier that manufactures and/or warehouses products, packages the products, and ships them directly to the retailer’s ( Your ) customer, on your behalf.
In simpler terms -
- The customer places an order for a product on your online store.
- You then forward the order and customer details to the drop-ship supplier.
- The drop-ship supplier then packages and ships the order directly to the customer for you. Meaning you don't have to store any Inventory or ship anything out at all.
The benefits of Drop-Shipping -
Low Start Up Cost - Just pay for the cost of the Online Store set up and the ongoing shopify hosting fees - $44 per month.
You do NOT have to purchase the stock upfront at all. You simply place the order with the supplier/ drop-shipper AFTER the customer pays for their order on your site.
No packaging or shipping required - With a regular model of online retail where you stock the products yourself, you'll need packing materials, packing slips, Invoices, and of course, you'll have to send the products off to your customer, so shipping costs as well. With Drop-Shipping however, because you are not keeping the products at hand yourself, you will save money on packing and shipping.
The Risk of Drop-shipping as a Business Model is Significantly Lower - If the business doesn’t sell products it still doesn’t lose anything, so there is little to no pressure about having to sell your inventory.
The Business Can be Run from Anywhere & is not Location dependent - No office, no warehouse, no employees and no hassles. Little to no commitment to a physical space means that you could be sitting at a beach, sipping on mojitos while still turning profits. All you need is your laptop and the internet.
There is Lots of Variety When it Comes to the Products You Want to Sell - There is a drop ship supplier for almost anything that you would like to sell! You can rely on one great product, sell several products at once or mix it up; it’s all up to you. Find your niche and there is bound to be a supplier that caters to it.
Reduced Loss on Damaged Goods- Since the shipment goes directly from the supplier to the customer, there are fewer shipment steps involved which drastically reduces the risk of damaged items while moving from one physical space to another.
FREQUENTLY ASKED QUESTIONS -
Q. What's the catch? Do I have to pay fees to the dropship wholesaler/ supplier?
A. There is no catch. and NO. you don't have to pay any fees to the supplier. They make their money by selling their stock the same way as they would if the retailer were to buy the stock upfront.
Q. Is there a greater failure rate for dropship stores?
A) Not at all. As with any start up, you'll have to do some marketing and advertising and put in effort, especially at the start to attract a customer base and following. We can set you up with a Facebook business page so that you have a social platform to advertise and gain traction.
Q. What's the risk involved with a business model like this?
A) There is no risk at all, unlike selling through regular methods, with drop-shipping you do not have to pay for the stock upfront, so if you don't sell, you're not losing money on stock sitting there.