Many people are afraid to open an online store due to the initial costs and logistics problems. But imagine if someone offered to cover the initial inventory costs for thousands of items and manage your shipping and delivery operations. It would be much easier to start and you could manage your business from anywhere in the world. Does it sound too good to be true? Well there is a good option called Drop Shipping , which is dedicated to direct shipping from the wholesale supplier to the final customer.
In this article, I’ll show you all about Drop Shipping by means of a simple definition and a list of benefits. I will also show you how to find wholesale suppliers that offer Drop Shipping, and I will give you solutions to some common problems related to this method.
What is Drop Shipping ?
Drop Shipping is a method for retail sale in which it is not necessary that you have the products in stock. Instead, you can partner with a wholesale supplier that maintains your own inventory – transfer your customers’ orders and shipping data, and send the products directly to the end customer. The biggest benefit of Drop Shipping (direct shipping from the wholesale supplier to the final customer) is that you should not worry about shipping, delivery and inventory issues.
In addition, most of your customers will not know that you are using Drop Shipping, since the method of “shipping with your own label” allows you to make shipments from the wholesale supplier with a return address and a personalized ticket for your e-commerce store.
The benefits of using Drop Shipping
There are several reasons to consider the use of Drop Shipping:
You do not need a lot of money: Using Drop shipping makes it surprisingly easy to start selling online. You do not have to make a large investment in inventory, and even then you can offer thousands of products to your customers.
Convenience and efficiency: The successful launch and growth of an e-commerce company requires a lot of work, especially if you have limited resources. Not having to worry about shipments and deliveries is incredibly convenient and leaves you a lot of free time to focus on other aspects such as marketing, customer service and operations.
Mobility: With all issues of shipments and deliveries resolved, you will be free to manage your business from anywhere with an Internet connection.
It is a reliable model: You must be thinking that this sounds dubious, but it is not. Many of online stores, including large retailers such as Sears, use Drop Shipping to offer a greater variety of products to their customers without having to deal with the problems of larger inventory.
How can you find wholesale suppliers that offer Drop Shipping ?
Before contacting suppliers, you must have your legal affairs in order. In the United States, most providers will ask you for the EIN (Employer ID Number) number and a copy of the state sales tax and / or resale certificate. Once you are well established, you can start contacting suppliers that offer Drop Shipping.
There are several ways to find wholesalers that offer Drop Shipping, and the video below shows you your options:
If you already know what products you would like to ship using Drop Shipping, contacting the original manufacturer is the easiest way to find qualified distributors. Not all distributors will be willing to offer Drop Shipping, but you will find a list to confirm. Unfortunately, the market is full of misleading and poor quality information. If you decide to invest in a directory, I can recommend the World Wide Brands payment directory as a reliable source of wholesale suppliers offering Drop Shipping. But even so it is important that you be very careful.
Google can also be an effective tool to find suppliers that offer Drop Shipping, but you should have some things in mind.
Three ways to use Google to find wholesale suppliers:
Perform an extensive search: The wholesale providers that offer Drop Shipping have limited marketing and SEO (search engine optimization) skills, and will generally not appear on the first page of google when searching for a term such as “wholesale portfolio provider” . Instead, you should look further into the search results, often reviewing between 10 and 20 pages of results.
Do not judge by the cover: Suppliers also tend to have outdated sites from the 90s. So do not be scared when you see sites with design and bad content distribution. Although a modern and stylized design site can help distinguish an excellent supplier, a low quality one does not necessarily indicate that it is a bad one.
Use many different terms: while looking for suppliers, do not limit yourself to searching for “wholesalers”, make sure you use different terms such as “distributor”, “reseller”, “wholesale”, “deposit” and “supplier”.
Four common problems when using Drop Shipping
Despite my recommendation, Drop Shipping is not the nirvana of e-commerce. Like any model, it has its weaknesses and disadvantages. With some planning and knowledge, these problems can be handled and will not prevent you from managing a successful company with Drop Shipping.
1. There will be a lot of competition and minimum margins.
Solution: It’s true. The products that can be sent using Drop Shipping will generate a lot of competition. Generally this will lead to very low prices and a reduction in profit margins, making it difficult to carry out a viable business.
To be successful, you can hardly compete on price. Instead, you must offer value in another way, usually through education, service or selection of next-generation products. To see more information about how to choose a profitable niche and add value, visit these publications about how to find a product to sell and the anatomy of a profitable niche.
2. Inventory synchronization is difficult and can result in depleted products.
Solution: The best way to mitigate this problem is to work with multiple suppliers with overlapping product lines. It is inherently dangerous to trust a single provider. Having two suppliers duplicates the possibility that an item will be in stock and available to be shipped.
Many sophisticated providers offer product loading in real time. You can use a service like eCommHub to easily synchronize your website with the deposit.
Eventually, you will sell an exhausted item to a customer. Instead of canceling the order, give the customer a superior product at no charge! You may not earn much or no money in that order, but it is likely that you acquire a loyal customer of your brand.
3. It is difficult to sell products that you never see.
Solution: In today’s world, it is possible to become an expert in almost anything through the information found online. Selling products from manufacturers with detailed websites will allow you to intimately familiarize yourself with a product line without having ever touched the product. And when you need to answer specific questions about an item, with a quick call to the supplier or manufacturer you will get what you need.
You can also “buy” your most popular products to familiarize yourself with their use, and then resell them as “used” or “reconditioned”, usually recovering almost the entire investment.
4. Involving third parties will result in more errors and problems of shipments, deliveries and logistics.
Solution: Even the best suppliers that offer Drop Shipping make mistakes, and the mediocre ones commit many mistakes. The providers usually take care of the problems economically, but when they do not, you must be willing to spend whatever is necessary to solve the problem for the client.
If you try to blame your supplier for an error in shipping or delivery, you will see yourself as an unprofessional beginner. In the same way, if you are not willing to send a low-cost replacement to a client because your provider will not cover the cost, the one that will suffer will be your reputation.
One of the costs of the convenience of using Drop Shipping are the expenses to remedy the logistics problems. If you accept it as the cost of doing business and you make sure you always put the customer first, it should not become a long-term problem.
The conclusion about using Drop Shipping
Using Drop Shipping, is the road to immediate success in electronic commerce? Of course not. Like any successful online store, you must invest time in creating a website, marketing and superior customer service.
But using Drop Shipping does offer an easy way to get started and the ability to capitalize on others without having to shell out large sums from your own pocket. If handled correctly, it can be the basis of the success of your own online store.