What is DropShipping?
Dropshipping is a business model wherein you can sell goods without having to stock your products because a wholesaler will ship your orders for you at no extra cost. Yes, if you are a retail online seller, you can pass on all your orders to wholesalers keeping your margin. It is a wonderful way to start your retail business online because of its very low startup cost and absolutely no need to have avoidable inventories.†
Well, the concept is that you are free to buy just one item even at near wholesale price. By dropshipping you will be a part of a supply chain selling and distributing them and the wholesaler, the dropshipper, who stocks them, ships directly to your customer. In other terms, it can be likened to retailing where you will not be required to keep goods in stock, but pass the order and shipping information to the dropshipper for onward processing. What does it mean from a consumer's point of view; isn't he made to pay commission twice? Actually, this is where the whole fun is. Dropshipping is a way to purchase just as much goods as you like and pay wholesale price, when both the retailer and the wholesaler save by avoiding duplication of warehousing, shipping, packaging, and double taxation, wherever possible.†
How does DropShipping Work?
Suppose that you own a dropshipping business online. Your biggest investment to startup is to have an e-commerce website where visitors can browse products and orders online. Of course, marketing your store is imperative to the growth of business. If you havenít noticed, here it is. You donít stock goods that you advertise; there is no need for warehousing, staff and finally packaging. Remember, you arenít even bothered about exporting logistics and all other associated legalities because you will pass on the orders to your wholesalers for further processing.†
Obviously by dropshipping, you have avoided duplicating several cost components which your customers benefit by inheritance. Since you already have price/logistics understanding with your wholesalers (dropshippers), transactions go on smoothly which includes cost benefit all the three parties.