Know Why Drop Shipping is Best For Your Ecommerce Business
- by eSellerHub
Starting an Online business needs a large sum of money. But, the volume of stock that would sell within a particular timeframe cannot be determined. Thus the risk is high in terms of unsold stock. It is a common challenge faced by everyone in an eCommerce business or thinking of starting one.
This article covers the strategies to reduce shipping cost and how drop shipping can scale up your business and help you keep stress at bay.
About Drop Shipping
Drop shipping is an eCommerce business model that helps retail business to operate without possessing its own stock or inventory. It is a supply chain management process where orders are transferred from customers to manufacturers, wholesalers, or other retailers. He would ship the item to the customer directly.
Related Article: Dropshipping guide: Everything you need to know
Drop Shipping Advantages
- Complexity: It is not quite simple or very complicated for anyone to use. Many big brands in e-commerce opted drop shipping, to begin with. Some of them are Amazon, Zappos, Blinds, and Wayfair for those who seek inspiration.
- Variety of products: Provides products ranges in plenty to sell various products. It is because not much money is being spent on having the inventory. The brick and motor store might face specific problems with storage space. All furnishing items cannot be included, and only a few products can be kept in-store. But, if the retailer had a drop shipping facility arranged, many items belonging to different suppliers can be offered by the retailer and more options online. Retailers can display any quantity of products and needless to pay from until the customer places an order.
- Outsourcing Order Fulfillment and Low over-head cost: You need to take into account the cash upfront for the purpose of packing, inventory management, equipment, and storage space to set up things. Beginning with a small inventory is acceptable; however, for a vast number of inventories, storage pulls a lot of money. It is risky in the case where sales don’t happen as planned. In drop shipping, products are not stored in your warehouse because they stay with your supplier until the purchase is made. Additionally, it saves warehouse rent, human resources to pick-pack-ship orders, insurance, labor charges, etc. Thus you can stop worrying about spacing issues.
- Explore new products: You can discover new products that you can or even test the new products. It helps you to foresee your customer’s preferences and what they will be buying next. If it clicks, and the new products are sold, it’s an advantage. If not, don’t bother anyways you are not paying.
- Work flexibility: it makes it easier to work from anywhere and at any time. When the supplier performs picking-packing-shipping and storing activity, you are not confined within the location boundary. Using internet access, you can log in to your portal and verify it from any part of the world.
- No investment: Investment and warehousing is not needed to begin with drop shipping. Therefore, setting up your online business becomes more accessible from anywhere.
Shipping Strategies
Faster deliveries have become a necessity nowadays to thrive in an e-commerce business. More than a week on your listings have turned out to be on-day delivery and next-day deliveries from setting delivery dates. It is not only the time that matters for a seller, but also the Shipping Costs have to be kept in check. Let it be free deliveries or billing customers; one must be careful while choosing the right Shipping Company.
Here are some of the essential shipping strategies that one needs to know that can empower you as an online seller.
Don’t have one shipping company – When you are dependent on one shipping partner, delays cannot be handled effectively. A better way is to have more than one partner in the pipeline. Preferably have different operators from suppliers and to customers. You can pick another company if a delay happens, but it won’t ensure your “next day deliveries” on Amazon.
Because Two is Better than One – even though your agreement terms with the carrier may be favorable, the shipping time depends on the distance to be delivered. In Amazon and specific online marketplaces, shipping rates do not vary with distance. If you have a multiple-warehouse strategy, it is possible to do the same day or even next day delivery to more number of locations without piling up unwanted costs.
A Bilateral Agreement can Change Terms – Your shipping partners may expect to give enough business returns. In the eCommerce industry, a shipping rebate of $1/product is sufficient to offer a competitive edge.
Do not Compromise – If you go with a shipping carrier who provides service at a low cost, then beware that you might have to compromise on services quality to raise margin. So, don’t blindly go with any shipping company as it offers the cheapest service.
Summing Up
Drop shipping is a great business model for small start-ups to begin with. It is a tremendous help to leverage the opportunity to compete with other big retailers. Following the eCommerce strategies to bring down shipping expense is effortless with our custom eCommerce solutions for online sellers. Reach us now to develop a custom drop shipping automation software and to build custom shipping strategies to heighten your business prospective.