How Drop Shipping Affects E-commerce
The traditional method of doing business in e-commerce requires a lot of time and effort. You need to find a supplier for your products and then stock the items in your inventory. Once an order is placed, you then have to ship and deliver the items to the customers. This is where drop shipping comes in. With drop shipping, the process becomes easy and convenient.
In a nutshell, drop shipping serves as intermediaries between suppliers and customers. The drop shipper sends the order details to the supplier. The supplier then dispatches the item from the warehouse and ships it to the customer. Through this method, you free yourself from the stress of inventory management and product fulfillment. You focus on selling your products and improving your sales.
Advantages of Drop Shipping
When done successfully, drop shipping can transform the way you deliver your service. Contrarily, when done wrong it can negatively impact your service and reputation. We share a few advantages that come with drop shipping.
Satisfy customer demand
Unlike managing your own inventory, drop shipping removes the stress of getting out-of-stock products (unless, of course, your supplier runs out of stocks too). In turn, you satisfy customer demand more quickly than when you do it yourself.
Potential for more profit
A 2009 study conducted by professors Chiang and Feng shows that sellers using the drop shipping method are found to earn more than those who use inventories. The reason behind this is the reduction of financial expenses as you can save more by not spending on inventories.
More product options
Engaging on third party suppliers opens your business to a wide range of products without having to bring in inventory. You can also find new and interesting items you might not have otherwise found on your own.
Save money in inventory
With the drop shipping method, there is no need to keep products in inventory. You can launch an Amazon business without having to invest in thousands of dollars in inventory in advance. You do not buy the product unless a customer has placed an order. This significantly reduces your investment in products.
More time on your hands
In a drop shipping arrangement, you no longer have to receive, store, or deliver products. You don’t have to maintain and monitor stock levels either. Each of these tasks not only saves you money, but more importantly, time. The extra time you have can actually be useful for selling products.
Drop shipping may lead your business to greater height but it is not perfect so make sure you understand the risk it brings. Consider conducting more research about this method before you jump in and use it in your business.