What is Drop Shipping? | TeeIncome

What is Drop Shipping?


What is Drop Shipping?

Drop shipping is a type of fulfillment model that allow to purchase items individually from a wholesaler or a distributor and ship them straightforwardly to your store customers/clients.

what is drop shipping

Rather than obtaining a lot of stock/inventory, you just band together with a drop shipping provider/supplier and list their merchandise available to be purchased. When you receive an order on your store you just forward it to your supplier for fulfillment. The supplier will dispatch/ship the item straightforwardly from their stockroom/warehouse to your client/customer, and charge you just the cost of the shipped item.

Drop shipping is a retail fulfillment technique where an online shopping store doesn’t keep the items it offers in stock. Rather, when a store sells an item, it buys the thing from an outsider and has it dispatched straightforwardly to the customer. Subsequently, the merchant never observes or handles the item.

The greatest distinction amongst drop shipping and the standard retail model is that the selling merchant doesn’t stock or possess stock. Rather, the merchant buys stock as required from a third party – normally a wholesaler or manufacturer – to satisfy orders. Drop shipping Business Model is most preferred because of the huge benefits associated with it like easy to get started, less capital required, low overhead, flexible location, wide selection of products and easy to scale etc.

What are the steps involved in drop shipping?

1. The customer places the order with a shop or online store.
2. The Sotre/Shop places order with supplier.
3. Then the Supplier ships order to customer’s address
4. The Shop alerts customer, item has shipped.

What are the Pros and Cons of drop shipping?

PROS

  • Easy to scale
  • Low overhead
  • Flexible location
  • Easy to get started Less capital required
  • Wide selection of products

CONS

  • Low margins
  • Supplier errors
  • Inventory issues
  • Shipping complexities

Where to find drop shipping suppliers?

You can use a supplier directory called SaleHoo which is the biggest directory consists of the best suppliers and wholesalers or you can find suppliers directly and contact them and ask them if they dropship their products and are willing to work with you. For more information regarding how to find dropshipping suppliers click here.

How to spot ‘Fake’ suppliers?

FAKE

Membership fees – Real wholesalers don’t charge monthly fees. It’s important to differentiate between suppliers and directories. Directories (like Doba) are simply a list of wholesale suppliers, and they often do charge one-time or ongoing fees.

Sold to the public – Usually to get genuine wholesale pricing you’ll need to apply for a wholesale account, prove you’re a legitimage business and be approved before placing your first order.

How to spot ‘Legitimate’ suppliers for drop shipping?

LEGITIMATE

Pre-order fees – Many drop shippers charge a pre-order drop shipping fee that can range from $2 – $5 or more. This is normal, as he costs of packaging and shipping individual orders are much higher than shipping a bulk order.

Minimum order size – Drop shipping do this to filter out window-ship-ping merchants that will waste their time with questions and small orders that will never translate into meaningful business.

How to find great suppliers for drop shipping?

Great suppliers tend to have many of the following 6 attributes:

1. Expert staff and industry focus.
2. Dedicated support representatives.
3. Invested in technology.
4. Can take orders via email.
5. Centrally located.
6. Organized and efficient.

What profit margins one can expect with drop shipping?

The profit margins greatly vary depending upon the type of items you sell. For costly electronic gadgets the margins are low and will probably be in the 5% – 10%. For low priced items your margins frequently be in the 100%. However, approximately drop shipping gross margins are normally 10% to 15%.

Where people sell drop shipped products?

People out there are selling drop shipped items/products from where they can receive maximum of profits ! Numerous are selling on eBay and Amazon where sales are fulfilled by the drop shippers (wholesaler/supplier), also the items on uncountable eCommerce sites, particularly smaller ones.

What’s more, even the enormous big players use drop shippping to extend their item list and offerings or catalog. It’s feasible that big companies like Sears and OverStock use the drop shipping model for some of their less mainstream items. This permits them to offer a broad range while restricting the stock they need to keep up.

While it’s conceivable to sell drop shipped products in various number of ways, creating your own eCommerce site/store offers the best opportunity with regards to building a profitable, productive and fruitful business over the long run.

DOWNLOAD >> EBOOK HOW TO MAKE $20K BY DROPSHIPPING

How to pick products to dropship?

Considerations when selecting products.

Marketing Potential – Thinking about how you’ll market before you launch. Don’t know? Reconsider launching.

Accessories – selling product with many accessories is a great way to improve your overall margin.

Turnover – Try to find products that aren”t updated with new models every year.

Hard to Find Locally – Sellling a product that’s hard to find locally will increase your chances of success.

Size and Weight – The smaller the items, the easier they are to ship cheaply to your customers.

TIP: Picking the perfect product to sell is the biggest decision you’ll make and has long-term consequences on the success or failure of the business. Don’t pick based on personal interest, conduct market research to determine what your’re going to sell.

How to pick the best customers for your store?

All customers aren’t created equally.

Hobbyists – These are the people who spend a mind-blowing amount of money on their hobbies. Many people spend money to purchase laptop than they do on the desktops. targeting of  the right hobbyist niche/topic and you can perform well and see good results.

Businesses – These type of customers might be more price-sensitive, but they will usually order in the large quantity. Once you establish a relationship with them, you open the door to a long-term, high-volume relationship.

Repeating Buyers – Recurring revenue is a beautiful thing. Sell items that are disposable and/or need ot be reordered frequently and you can grow rapidly as you build a loyal customer base that frequently returns to purchase.

What to do to see success in drop shipping business?

Don’t invest a lot of money
JUst get it launched.

Invest a lot of time
Bootstrapping and sweat equity

Why you should start your own online store for drop shipping?

More control, strong branding, less fees.

PROS

More Control – Customize the look to complement your products; create custom product pages.

Easy Design – Building your own E-commerce store is easy, especially with platforms like Woocommerce.

Mobile Ready – Many themes on hosted E-commerce platforms are responsive to most devices.

No Third- Party Fees – You won’t have to pay 10% to 15% of every sale to eBay or Amazon.

Build a Real Business – It’s much easier to sell a business built around an independently owned website.

CONS

Less Free Traffic – You’ll be responsible for generating traffic through marketing, SEO and advertising.

Increased Complexity – You’re responsible for configuring the design, layout and structure of your store.

also read: [Infographic] : Ultimate Guide to Dropshipping

Conclusion

You should always stay vigilant about below things after getting your drop shipping store business setup:

  • Accept that the things can get messy.
  • Adopt a KISS mentality
  • Own up to a botched order
  • Consider multiple suppliers.
  • Manage out of stock situations.
  • Route orders intelligently.
  • Stay vigilant with fraudsters.
  • Nail down a fair return poilcy.
  • Worry more about shipping as you grow.
  • Be constantly invested in support.

Thanks for Reading!


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