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The Benefits of Drop Shipping

Drop shipping is a practice of order fulfillment where a manufacturer/distributor ships a product to a consumer on behalf of the retailer. Drop shipping can be very attractive because it helps to minimize risk and cost while offering convenience and practicality.

dropshipping The Benefits of Drop Shipping

Minimizes risk

  • Money does not need to be paid upfront to acquire the inventory which means that if the business does not pan out, the only money you have lost is what you paid to get your website started
  • Your business is less susceptible to loss of revenue as a result of changes in tastes or trends because there is no such thing as excess inventory
  • Lower volume niche products can be offered along-side popular best sellers

Lowers costs

  • New products are less expensive to launch because they do not require an investment before they can be sold
  • Often you have access to better shipping rates through a drop shipper than you would as a small business shipping your own packages
  • The number of goods that get damaged during shipment is generally lower when using drop shipping because it reduces the number of times that the product has to change hands

Offers convenience

  • All the hassle of packing of products to prepare them for shipment is taken care of for you
  • You can add new products to your offerings very quickly

Provides practicality

  • A storage facility or retail location is not needed- just the website where the items will be sold
  • Your business can offer a wider variety of products than would be possible if you had to buy and store all of the items you decided to sell
  • Products that are impractical to store (ex. large products, perishable products, etc.) are easier to sell

Remember, many drop shippers will allow you to supply your own labels so customers do not even need to know that you are using a drop shipper rather then sending them their merchandise personally. The increase in drop shipping providers and offerings has made it easier than ever to start an online store!

Happy selling!
Kate Pierce, Volusion

8 Responses to “The Benefits of Drop Shipping”

  1. Freddie

    I’ve been using dropshipper to run my online business, and I can honestly say I could not be more happier.

    Reply
  2. Shipwire Order Fulfillment

    Drop shipping is growing in popularity. Whether you are a manufacturer, supplier or online/offline retailer you really owe it to yourself to learn as much as you can.

    I’ve written quite a bit on the pros and cons of manufacturer drop shipping. You can see a synopsis and get to an article I wrote for Practical E-commerce to demystify . Learn how manufacturers and suppliers can offer drop ship; how they can save money doing it while growing market share. Learn about pitfalls and successes. The full article and other trends for drop shippers in in the Shipwire profile on practical ecommerce

    Shipwire provides ecommerce order fulfillment and pick-pack services for manufacturers and retailers. We even have a free Volusion module to automate your volusion store with warehouses in the U.S., Canada and the U.K.. http://www.shipwire.com/help/volusion_fulfillment/

    If you want to see a case study about a manufacturer that has grown massively by mastering drop shipping look no further than Keetsa. A mattress company that ships mattresses in a box. They learned that free shipping and free drop shipping allows them to sign-up retailers faster and provide a seamless customer experience. They are both manufacturer and retailer so you can learn about controlling MSRP as well. They are also eco-friendly, so learn about how drop shipping and centralized inventory management helps them reduce their carbon footprint. http://www.shipwire.com/help/green-supply-chain-case-study/

    Happy drop shipping. Thank you Volusion for talking about drop ship on your blog and pointing it out to me over twitter for comment.

    Nate G
    Shipwire fulfillment

    Reply
  3. Jagath

    Great article describing the advantages of drop shipping. While I agree with the pros of drop shipping mentioned in this article, in my experience of working with small businesses, drop shipping is not always as rosy as it seems. Here are the things to watch out for –

    1. You have to manage the dropship requests with the vendors and ensure that your customers receive the products on time. I have seen cases where the vendors do not ship on time. And when they do, sometimes they ship the incorrect product. This will directly affect your customer satisfaction levels.
    2. As your vendor count increases, the complexity of managing all those vendor relationships also increases.
    3. You no longer have strict control over the look and feel of the package being shipped. While the vendor will use the label provided by you, they may not agree to adhere to other packing requirements.

    It is good to be aware of these issues while negotiating the drop ship contracts with your vendors.

    Reply
    • Shauna

      Do you have experience with drop shipping? I’m starting a online store, would I be kidding myself if I think I can start with $0 upfront and eventually make a profit.

      Reply
  4. ANTHONY McCARTHY

    I would like to start an online business like this I want to fine a reputable drop shipping company.I have seen ones where they provide a website as well but I am not convinced by them.

    Reply
  5. Ken Hardy

    Great post here. Drop-shipping is definitely one of the best ways to make revenue online and all resources help the cause! Check out http://www.dropshipping-products.com for some more advice, I always refer to that site! Good resource, and post!

    thanks!

    Reply
  6. John

    These are all great points clarifying the advantages of dropshipping. I feel the best advantage to using dropshippers is the low initial investment required to get your business off the ground. You literally do not need to lay out a dime for inventory until you make your first sale. Even then the money you use to pay for the item you resold can come from the revenue of the sale and you keep the difference.

    Reply

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