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Drop Shipping: How Does Drop Shipping Work?

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Running an online business takes much more than just having the right products. You need to have the best strategies too. You need to make an informed decision of how to get your products and sell them out. This will mean having to consider your storage space too. If you have enough storage space you could stock products, but what happens if you don’t have that type of space? You drop ship!

What is Drop Shipping?

So what is drop shipping? Drop shipping is much more than meets the eye. In reality, it is a retail business option where a store owner doesn’t keep the products they sell in stock – for lack of storage space among other things.

Because of this, when such a store sells a product it will purchase the product from a third party and in turn have it shipped directly to the buyer. Thus the merchant will not see the product or handle it. This minimizes costs too.

What are the Benefits of Drop Shipping?

Unlike the other retail models that we know of, drop shipping has a number of benefits that you would enjoy. They include the following.

Flexible Location: A drop shipping business can be run from anywhere around the world. The most important you need to have is an internet connection. Additionally you should be able to communicate with the suppliers and customers easily.

drop shipping

Less Capital to Start: I would say no capital at all. This is even truer if you use an open source platform to create your drop shipping website. This is because you don’t have to purchase a product unless you’ve already made a sale and have been paid by the customer. And more to that you require no major up front inventory investments.

Low Expenses to Go: You don’t have to deal with purchasing inventories or managing a warehouse. Your overhead expenses become very low. This is when compared to many other retail options that you could have around.

Easy to Get Started: Think about it, you don’t have to deal with any physical products. What this means is you don’t have to manage or pay a warehouse. You don’t have to pack or ship your products. You don’t have to track inventory. Neither do you have to handle returns or inbound shipments. This is the easiest e-commerce model ever.

Wide Selection: Because you don’t handle physical products your catalogue can be quite long. You have the potential to handle so many customers without the worry of where and how you will store their products. All you need to do is list an item once the supplier stocks it up.

What Difference Does Drop Shipping Have?

Drop shipping has quite a number of differences between its model of operation and that of the normal retail processes. Some of the most distinctive differences include the following.

  • The merchant never sees or handles the product.
  • The merchant doesn’t stock or keep a physical inventory.
  • You can start the business anywhere and move anytime.
  • The merchant buys inventory from third party to fulfill order.

Conclusion

If you were wondering what is drop shipping you probably know by now what it entails. However it requires you to dedicate your time to get it rolling fast.