Getting an e-commerce operation up and running requires making arrangements for shipping. There are a number of ways to get goods from you to your customers, but not all are a good deal for you. But it turns out there is a way to make money in e-commerce without handling shipping yourself. It is called drop shipping.
Dropshipping is an e-commerce model that leaves the shipping to others. Rather than you receiving merchandise from wholesalers, storing it in a warehouse, and then filling orders yourself, merchandise goes directly from the wholesaler to your customer.
Dropshipping is not the right choice for every e-commerce operator. But it does work well for those whose business models are optimized for dropshipping. Incidentally, dropshipping is a fantastic option for U.S.-based retailers looking to sell products from overseas.
How It Works
Dropshipping is pretty basic in principle. Under a normal e-commerce arrangement, you would buy products from a variety of wholesalers. Those wholesalers would ship to you. When you get orders from your customers, you fill them and ship them out yourself.
Under a drop shipping arrangement, you do not order bulk inventory. Instead, you place orders with your wholesalers as your customers place orders with you. Let us say Mary Smith ordered five T-shirts. You go on the wholesaler’s website and order those same five T-shirts. But instead of the T-shirt being shipped to you, they are shipped to Mary Smith. Your name is on the package and invoice. She does not know the difference.
The thing about dropshipping is that not every wholesaler offers it. Many do but many others do not. Among those that do, some upcharge for shipping. In other words, they take whatever their shipping charges are and add a little bit extra for margin. They are basically making a profit on handling shipping for you.
Dropshipping International Goods
An e-commerce operator may not be interested in dropshipping domestic goods. But there are benefits to doing it for international merchandise. First and foremost is eliminating the hassles of having to worry about imports. According to Preferred Shipping out of Sugarland, TX, experts on small business international shipping, the hassles of handling imports are very real.
Preferred Shipping & Handling is an authorized reseller of DHL Import Express. The good thing about Import Express is that it is eligible for dropshipping. You can order goods from overseas and have them shipped directly to your customers. DHL handles all of the import requirements on your behalf. It is basically hassle-free importing on a small scale.
Find the Right Suppliers
The key to making money with dropshipping is to find the right partners. That starts with your suppliers. Unfortunately, there are some wholesalers who charge extra for dropshipping services. That is not necessarily bad, but if wholesale prices end up being too high, you may not be able to sell at a competitive retail price. You could be priced out of the market by your wholesaler.
You also have to be able to trust your wholesalers to ship out orders in a timely manner. You cannot safely offer two- or three-day shipping if your wholesalers cannot be trusted to get orders out quickly. The bottom line is that you need to have confidence that your dropshipping wholesalers are up to the task.
Dropshipping is an option for making money in e-commerce without having to do shipping in-house. When it works, it tends to work very well. When it does not work, it can be a disaster. As always, it is in an e-commerce operator’s best interests to research dropshipping thoroughly before making a move.