What Drop shipping is and how it works
Drop-shipping is now becoming more important to both online retailers and suppliers. A wholesale drop-shipper is the ideal way to start a business with little to no funds. The wholesale drop shipper supplies convenience, keeps the merchandise on stock, and delivers instead of you.
What Drop shipping is ?
Drop shipping is a “supply chain management technique” in which the retailer does not keep goods in stock, but instead transfers customer orders and shipment details to either the manufacturer or a wholesaler, who then ships the goods directly to the customer. As in all retail businesses, the retailers make their profit on the difference between the wholesale and retail price.
Hence, drop shipping provides a way for people to sell physical products on the internet that they never have to see, store, package, ship, or even pay for. In short, drop shipping is the technique of selling wholesale goods to consumers while the supplier ships directly to your customer.
Example: Let us talk about site like eBay. EBay is so popular, it because they easily sell physical products online. EBay uses drop-shipping technique to deliver goods directly to the purchaser.
How Drop Shipping Works ?
[1]. You open an internet store with a shopping cart and accept credit cards, pay pal on your site. You can also sell on internet auction sites.
[2]. You find a distributor who will “drop ship” the products you want to sell. For this, you join SaleHoo member’s only internet wholesale directory.
[3]. You collect descriptions and images of the products you wish to sell from the distributor and put them on your online internet store or in internet auction site.
[4]. When a customer buys from your store or auction, they pay with their credit card or pay pal account. Your store or auction charges their credit card or pay pal account plus shipping.
[5]. You email the order to the drop ship distributor with the customer’s name and address.
[6]. The drop shipper charges you the wholesale price plus shipping. Remember you have already passed the shipping charge on to your customer, so the shipping costs you nothing
[7]. Finally the drop shipper dispatches the product to your customer from the warehouse with your business name on the package.
Therefore, that is how drop shipping works. Therefore, you collect payment before you place the order of the item. In this way, you never have to use your own money. This is one of the benefits of drop shipping. Because of this fact, it is very easy for someone to get started without putting down any money.
Benefits of Drop shipping
The main benefits of drop shipping are :
[A]. No upfront inventory to purchase
[B]. A positive cash flow cycle; a positive cash flow cycle occurs because the seller is paid when the purchase is made. The seller usually pays the wholesaler using PayPal or a credit card.
[C]. Eliminates duplication of effort as only one warehouse will pick, pack and ship the product thereby reducing costs in the supply chain.
[D]. Reduces total inventory management and shipping costs.
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