The Ins and Outs of Drop Shipping
If you’re launching your first online business, you want to set yourself up for success well before you go live. We’ve helped clients start hundreds of e-businesses, and we know how important it is to invest in solid prep and a strong plan.
One way for you to set yourself up for lasting success is by opting for a drop ship model. Never heard of it? Don’t worry! In this article, we’ll walk you through the ins and outs of drop shipping and why it can be an easy and safe way for you to get your business off the ground.
What Is Drop Shipping?
Drop shipping is an order fulfillment method where your vendor sends stock directly to the customer. As the business owner, you never have to handle or stock the products: You simply send customer orders to your wholesaler, who will process them and then send the product straight to the customer from their warehouse. You don’t have anything to do with shipping, warehousing, or returns.
What are some big drop shipper names? Check out companies like AliExpress, Worldwide Brands, Oberlo, and Megagoods to get a sense of what they sell and how they work.
What Are the Benefits of Drop Shipping?
For a new and relatively inexperienced e-business owner, there are many benefits to drop shipping, like:
- You don’t have to stock products yourself. You’re not responsible for warehousing your products—often a massive expense and headache.
- The start-up costs are low. Because you don’t have to purchase and stock inventory, your initial expenses are limited. You don’t require a huge amount of capital to start your e-business.
- Your business becomes easy to scale. In a traditional business, your expenses and operations would increase as you scale. This isn’t the case with drop shipping, meaning you can continue running your growing business from your dining room if you choose.
What Are the Disadvantages of Drop Shipping?
While there are plenty of advantages to drop shipping, you should also be aware of a few disadvantages, as well:
- You have very limited control over the supply chain. You’re dependent on the supplier to maintain their stock, ship on time, and process returns. If they don’t, then the customer’s complaints come to you. You also don’t have the opportunity to add value to the product yourself, for example by customizing a product.
- You’re competing with businesses with access to the same products as you. Because it’s so easy to buy from drop ship suppliers, many other companies do it, too. This means there could be ten other companies selling the same things you are. But if you’re a savvy business person (which we know you are!), you’ll see this as an exciting challenge to stand out from the crowd. How can you market your product differently from competitors? How can you add unique value? Be creative and bring your unique skill and vision to bear.
How Should I Choose a Drop Ship Supplier?
If you’re intrigued by drop-shipping, start looking into some wholesalers you might want to work with. The supplier you choose depends on what niche you’re selling in: Obviously, you’ll need to find a supplier that sells what you want to stock. But your choice also depends heavily on the supplier’s reliability, the quality of their products, and their policies. Here are the steps you should take to do due diligence and pick a supplier who will make you and your customers happy:
Step 1: Read reviews of the suppliers you’re considering. There are many websites that review and rank drop ship companies, so a quick Google search should give you some answers. Make a shortlist of a few promising-sounding suppliers.
Step 2: Review the supplier’s policies page for things like returns, lost packages, and damaged products. Normally, as the merchant, you would be able to set these policies for your customer. However, because your vendor is shipping directly to the customer, you don’t have a say and will have to simply stick to the supplier’s guidelines. This means you want to be sure you approve of their policies and can defend them to customers. Get in touch with the supply company if you can’t find their policies online.
Step 3: Now comes the fun part: testing the products! As a business owner, you already appreciate the importance of selling high-quality products you’d use yourself. To make sure you can stand behind your products and write eloquently about them on your website, buy one for yourself to try it out. This also gives you the chance to gauge shipping time and packaging. If the product arrives late and in bad condition, you’ll know to pass on that supplier.
Step 4: Finally, before you commit, learn about subscription costs. Most drop ship suppliers require you to pay for a monthly or yearly subscription. For instance, Importify offers three tiers of plans, while Worldwide Brands has one lifetime-access fee. Plus, suppliers may charge other hidden fees; make sure you cover all your bases before committing to a supplier, so you’re not unpleasantly surprised when you get the bill.
To achieve long-lasting success as an e-business, you have to start off on a firm foundation. Drop-shipping can be a great way to mitigate risk and remove the initial challenges that stymie so many new business owners.
If you want to learn how Company Bee can help you get started with a drop-ship fulfillment method, get in touch with us today. We’re experts in all things drop-ship and e-commerce and can help you build the business of your dreams!