Running an eCommerce business isn’t easy, and plenty of new business owners are overwhelmed by the amount of responsibility that falls on their shoulders. As you get ready to start your new business, you need to consider a multitude of factors—website design, product lines, marketing efforts, customer support systems and shipping methods. While many traditional businesses purchase and house their own inventory, when it comes to eCommerce, this isn’t your only option. In fact, it’s often an ineffective method of storing and shipping products because it requires the business to have space to store the products and the time and/or resources to individually ship every order.
Because most business owners are operating their eCommerce company with little to no help in the beginning, this adds another duty to their long list of responsibilities and it can become too much. Drop shipping offers the perfect solution to small businesses without the time and resources to store items and pack products into shipping boxes. Read on to learn more about this popular method of order fulfillment to determine if this is the right option for your eCommerce company.
What Is Drop Shipping?
Drop shipping is a type of order fulfillment that eliminates the need for eCommerce business owners to purchase and store inventory themselves. Instead, as customers purchase items from the eCommerce site, the business orders the product from the manufacturer. Once the manufacturer has received the order, they will prepare the item and pack the products into shipping boxes to be sent directly to the customer. Basically, drop shipping completely removes the merchant from the fulfillment process.
Drop Shipping vs. Direct Shipping
The biggest difference between drop shipping and direct shipping lies in where the products are being sent from. With drop shipping, products are sent to customers directly from the manufacturer. This method does not require the business owner to purchase their inventory ahead of time–rather, products are ordered from the supplier based on demand. With direct shipping, the business owner has already purchased a specific amount of inventory and must store the items themselves. When an order is received, the business itself is responsible for packing and shipping the products to the customers. There are advantages and disadvantages to both methods, of course, but for new, smaller eCommerce businesses, drop shipping can usually offer much more advantages in the beginning.
Benefits of Drop Shipping
As a new business owner, cutting costs can help your business to succeed, and opting for drop shipping is an excellent way to reduce overhead. Many businesses will spend a lot of capital to acquire their inventory and, unfortunately, there’s never a guarantee that the business will make back the money spent on inventory. Some products may end up never selling, creating what is known as “deadstock.” There’s always this risk of losing money on inventory, especially for new companies that don’t yet have data on which products perform well. With drop shipping, you can eliminate this issue completely. You won’t need to waste money buying products because orders are placed with the manufacturer as customers make purchases from the site.
Requires Less Space to House Inventory
Not only are you saving money on inventory costs, but you also won’t need to spend money on a place to store all your products as the items remain with the manufacturer until it’s time to ship to the customer. All of the costs of shipping boxes and materials also falls on the manufacturer, freeing up your resources for other aspects of the business.
Easy to Switch up Product Offerings
Because drop shipping doesn’t force business owners to invest in their products upfront, you have the ability to experiment with selling different items more easily. You don’t have to take the risk of purchasing new inventory. Instead, you can simply add a new product line with your site and analyze how your customers respond. This can keep your customers engaged with your brand if you’re able to continually offer new items, and it helps you identify and eliminate products that your customers aren’t interested in without losing money on inventory.
Less Stress on Business Owner
Drop shipping obviously offers a plethora of monetary advantages to business owners that opt to use this order fulfillment method, but it also makes the merchant’s life much easier. As a business owner, you have a nearly endless list of things to be thinking about every day. Having the ability to knock one thing off your list can greatly reduce your stress levels and increase your productivity. With drop shipping, you don’t need to worry about packing products into shipping boxes, receiving orders, sending packages off, and releasing tracking information. Let your manufacturer handle all the fulfillment duties so that you can spend more time focusing on other aspects of your business like your marketing strategies or training your customer support team.
You Can Begin Selling Products More Quickly
When you use the drop shipping fulfillment method, you don’t need to wait for new inventory to come in to begin selling new product lines. Instead, as soon as you find items that your manufacturer offers that you believe would be good to offer on your own site, you can simply add the products to your website and begin selling. This increases your potential revenue numbers and gives you the freedom to switch up your offerings at any time.
Make Shipping Easier
Drop shipping is the recommended order fulfillment method for new and small eCommerce companies because it allows the business owner more time and resources to funnel back into the company. You can leave all the requirements of receiving, packing and shipping orders to the manufacturer, eliminating the need to purchase inventory and offering customers new products at the drop of a hat. Don’t waste your time packing products into shipping boxes—focus your time and energy on growing your business and try drop shipping orders directly to customers.