When you’re just starting an ecommerce business, many decisions need to be made about how you plan to operate. Even if you’ve had your doors open for decades, these same areas need to be revisited every so often to ensure that you’re doing things the best way possible.
One of these is your shipping processes. Is it as efficient as it could be? Are your costs where you’d like them or could you get them lower? Does the shipping method you’ve chosen best meet your needs?
The questions go on and on, and some small and medium-sized ecommerce business owners are deciding, based on their answers, that one form of shipping is just right for them. It’s called dropshipping.
What is Dropshipping?
If you’ve never heard of it, drop shipping means “to ship goods from a supplier directly to a customer.” How does it work?
First, you put items for sale on your website, but you don’t purchase them from your suppliers to have them on hand. In fact, it isn’t until you have a solid order from a paying customer that you buy their desired goods, asking the supplier to ship directly to them.
Dropshipping Good for Businesses
This form of shipping provides many benefits to the business itself. For starters, you don’t have to keep any inventory on hand, so you don’t have to physically store the items you plan to sell. This can save you a lot of money as warehouse space can cost you hundreds of thousands of dollars annually to lease, or even millions to buy.
Plus, if some of your goods don’t sell as good as you expected, with dropshipping, you aren’t left with a warehouse full of items you can’t get rid of. This reduces your liabilities, giving you a stronger financial stance as a result.
Dropshipping also enables you to set your own prices while giving you access to literally millions of products that you can offer to your customer base. All you have to do is choose which ones.
Dropshipping Also Beneficial to Consumers
Though dropshipping is good for businesses, it also provides a number of benefits for consumers. One of the most notable is that the customer doesn’t have to pay dual shipping costs. In other words, they aren’t paying towards what it costs for the supplier to ship to you and then you to ship to them. Instead, there’s just one cost.
Second, they can also get a price break in that you don’t have as much overhead costs to recoup during your sales. With no storage fees and unused inventory, you’re able to pass your lower business costs on to them, giving them access to competitive pricing without hurting your bottom line.
Creating an Effective Dropship Process
If this particular shipping model would work well for your business, there are a few things you can do to streamline the process. For example, when creating your dropship plan, think of all possible shipping scenarios, such as how you plan to deal with returns, and decide how you’re going to deal with them.
Depending on the company you use for your dropshipping, it may make more sense to accept returns yourself and deal with the supplier directly. This might take a little more time and effort on your part, but your customers will likely appreciate how easy you made it for them, rewarding you with repeat sales.
Dropshipping offers a lot of benefits for businesses and consumers alike. Should you determine that it is the best option for your company, just be sure to create a process that covers all shipping scenarios. That way, you’ll know exactly what you’re going to do, regardless of the circumstance.