If you’d rather not spend all of your time wrapping and posting parcels, drop shipping can be a very tempting way to go for your online store – and also become a good source of passive income. Although you still have to market your goods and have systems in place to take customers through your sales funnel all the way to payment, drop shipping can help you to get your business started relatively quickly and without an enormous amount of start-up capital.
What’s drop shipping all about?
Drop shipping is a system of fulfilling orders from your online store where a manufacturer or a distributor ships the product straight to your customer on your behalf. You don’t keep any stock, you don’t post anything out. You just pass the orders received on your site to your distributor and they do the rest. You make money by charging more for the goods than you pay to buy them from the distributor. Here are 4 benefits of drop shipping:
1. Easy to start
With dropshipping, you don’t have to worry about buying a huge warehouse, managing stock, employing staff to pick and pack. You don’t even need to deal with returns or all the complicated accounting that goes along with being a manufacturer or a distributor.
All you need to concentrate on is making sure there’s a market for what you want to sell, ensuring you can get it at a good price, and working on your sales funnel.
2. Less money up front
With a standard bricks and mortar business, you’d have to have a budget for your store, staff, inventory, postage and a lot more, but with dropshipping, you don’t actually buy anything until you have sold an item and have already been paid.
3. Low overhead and running costs
With dropshipping, you really could run your business from a laptop in a coffee shop, or right from your living room. You don’t need storage space for anything, just somewhere to work, an internet connection and whatever software you need for your website and sales funnel.
4. Easier to scale
There’s no need to invest in bigger warehouses to offer a wider range of goods. Just look at your supplier’s stock, choose what you want and you can sell it.
While you may find that you need help eventually, perhaps in the form of customer service staff or a virtual assistant, you won’t need to invest in more staff, more processes or more work to the same extent that you would need to if you were the supplier.
As with anything, there are a few downsides to consider. You’ve got to be comfortable with the fact that, to the customer, you are responsible for anything that goes wrong, even though it could well be down to the supplier. The customer doesn’t care about that, they just want their goods – so it’s important to make sure you have a plan for handling situations that may occur. You’ll also need to keep an eye on any supplier issues, spend some time finding the best suppliers you can, and watch your margins, which can be tight.
Drop shipping is low risk and low cost as you don’t need to lay out money up front for your stock. As long as you’ve found your target market and have a thoroughly planned marketing strategy to make your sales, drop shipping can be a very effective order fulfilment method for your company.