What do you think is dropship? What is it all about? You may have come across the term before but didn’t understand what it actually meant. Well, here is a simple dropship definition to clear the air.
Dropshipping is a process that basically involves product delivery by the manufacturer to a buyer but with a receiving payment for the order. In this arrangement, the retailer acts as the middleman or the link between the buyer and the manufacturer. His or her gain is a difference between the original wholesale and the retail cost of the product.
However if it is still not clear enough, here is a much simpler dropship definition. Dropshipping is a way by which goods are sold online or over the internet without the goods passing through the hands of the retailer. The retailer simply acts as a middleman between the buyer and the supplier and never has to handle the goods physically.
The supplier will bear the brunt of managing the inventory as well as the shipment of the product while the retailer receives the payment for the goods and pays the manufacturer an agreed percentage thus making profit even without selling physically.
Going by this dropship definition, it means retailers tend to make a considerable profit from actually getting the customer to buy the goods at a rate cheaper than the market price while receiving a share of the money which is still above the manufacturers valuation.
Dropshipping is a big business and for most people who take to it, it is advisable to join one of the dropshipping networks numerous on the internet today. While it is required of you to pay to become a member, the benefits accrued to such associations are numerous. One of which is the fact that you will get access to tools and ideas that will help you sell faster and scope your competitors.
You will also get an exclusive list of suppliers that you will choose from to supply the type of goods you specialize in which will then be sold on a safe and secure online shopping portal setup by you or belongs to a company they may recommend for your use.
Dropshipping is a method mostly employed by internet reliant stores, small retail shops and those that use sales catalogs. People who engage in dropshipping are aware and prepared to receive their goods at a later time.
They know they cannot come out of the shop immediately with the procured goods. Since most goods are being shipped, there will always be a period of delay between shipment and delivery which the customer would have to make do with. The item could be displayed on the shelves by using a dummy or appear in the catalog, but the actual product purchased could possibly be in a warehouse some miles away.
One of the greatest problems dropshipping solves for retailers today is inventory control. Usually, in a retail store, Products are normally ordered directly from the manufacturer in large volumes and would be stored in a safe location until they are ready to be displayed.
This means, the retailer has to maintain a storage area, usually a very large one, employ workers who will take care of the stock and also spend on security measures to prevent theft. Dropship totally rids the vendor of all these problems. He doesn’t need to keep a huge inventory anymore. He can as well put the excess space for storing goods into displaying them and also save money by employing fewer hands to take care of receiving, shipping, taking stock and security.
Many internet only stores and small retailers are now extremely reliant on dropshipping because it solves a lot of their problems. They get more space to use for their stores, they don’t have to handle shipping of product which is done by experienced professionals and they have little inventory to keep track of.
Retailers with small shops are able to display large or exotic items without the fear of where to store them or what would it could cost to import. The manufacturers as well benefit from reasonable agreed shipping costs or percentage on sales.