Drop shipping is a great way to get your feet wet in e-commerce. It's a low risk option compared to other e-commerce solutions! It's a simple process but like any other method, it has its pros and cons. I will discuss both later.
First, what is dropshipping? Dropshipping is a fulfillment method where you keep no physical products in stock, you never see or handle the product. When your store sells a product, you purchase it from your vendor. The vendor will ship it “blindly” to your customer with the name of your store or a general name like “shipping department”.
For example, let's say you have a store called coolheadphones.com. Your customer goes to your online store and purchases a pair of headphones you’re selling for $30. After you receive the order, you go to your supplier’s website coolheadphonesdropship.com (not a real store) and place the order of the headphones (the exact one your customer ordered) for $10. This is very important: for the shipping address you put your customer’s address. The billing address will be your address. Your supplier packages the headphones and mails it directly to your customer, with your information, as if it came directly from your store! Your customer never knows it came from your supplier and you have yourself a profit of $20!
PROS vs. CONS
Dropshipping has its advantages. You can run your own online store and not have to worry about any physical inventory! Meaning, unlike buying wholesale, where you order your inventory in bulk and have it shipped to you, with dropshipping your inventory is kept by your dropship supplier! Your vendor keeps the inventory and ships it your customer. With this method,
you can focus more on other aspects of your business like your customers,
advertising, and branding.
Some vendors offer automatic inventory syncing that connects directly to your online store. Meaning when your supplier is sold out of an item it will update in your store automatically. Every supplier does not offer this and that is a disadvantage with dropshipping. This means you will have to keep a constant eye out on your supplier’s inventory. The vendors that are not tech savvy, means you have to manually update your inventory.
*Tip: If your supplier does not have inventory automation, simply ask what they suggest as far as keeping your inventory up to date and as accurate as possible*
