Inventory and warehousing products are one of the most difficult aspects of owning a store. You need to have various stocking processes in place to keep track of everything, as well as hiring reliable personnel who can manage them. The actual thought of having to hold inventory, handle customer orders and run a real ‘brick and mortar’ business is more than enough to give any budding entrepreneur a headache or stress attack — hence why the world of affiliate marketing has become such a successful and attractive venture for many.
However, there is still massive opportunity and wealth in the world of selling physical products — even without the need to purchase, hold and ship products of your own. This is where drop shipping comes into play, which is another new type of warehouse management that has helped change the way businesses think about inventory.
This article is going to explain the need-to-know information about drop shipping and how it can help your business.
Drop shipping is a method for selling physical products without needing your own warehouse, storefront or having to buy inventory in bulk while still getting wholesale prices from your supplier. It’s a method for retail fulfillment that doesn’t require the storeowner to even carry the products on hand. Instead, when a store sells an item, the business will purchase the product from a third-party organization and have it shipped directly to the customer. A drop shipper can sell anything from tube socks to PlayStations and never have to worry about warehouse space.
In many cases, drop shipping based businesses are quite similar to affiliate marketing, in the aspect that you are still marketing for customers, sales and leads, but you are actually keeping that consumer information and growing your own brand. Depending on the products you are selling, there is also potential for much greater profits as well. In short, if you have found success with affiliate marketing, there is a great chance you could find success with an e-commerce site powered through drop shipping as well.
Starting up a inventory-based business requires a lot of hard-to-obtain seed money that will require some serious investment. However, it is much cheaper to start an ecommerce business and drop shipping helps lower costs even further. When you follow the drop shipping model, you don’t have to purchase any products until you’ve already made a sale and been paid by the customer. (ie: You get paid by the customer, then use their proceed to pay for the actual product from the drop shipper)
When it comes to overhead, you can’t really beat the one-two punch of ecommerce and drop shipping. Since you don’t have to worry about managing your inventory on-site or dealing with the hassle of a warehouse, your overhead costs can be relatively low. However, depending on the ecommerce platform you choose, which may come down to a comparison between Shopify Plus vs Magento Enterprise, your overhead will likely rise as a result of expansion.
Not to mention that an ecommerce business following the drop shipping model can be opened from anywhere on the planet with Wi-Fi. As long as you have the ability to communicate with customers and suppliers, you’re in good shape to run your business.
Again, for any experienced affiliate marketers, the transition to an ecommerce or drop shipping based business shouldn’t be hard to accomplish. At the same time, having such experience in the world of online marketing will help scale out your business even more. Adding email marketing, retargeting, Facebook Ads marketing and blogging into the mix, you may just find your ecommerce site quickly scaling past your other affiliate marketing efforts and earnings.
While drop shipping is a great way to keep your overhead costs down, it also comes with some challenges. Chief among these challenges is the issue of inventory. While not having to keep physical products on hand is a great way to save costs, it also means that you are at the mercy of third-party warehouses. For example, say that you only sell hand sewn tube socks and you only have one supplier of this product. If that supplier runs out of tube socks and you still have customers ordering them, you are going to have to either find a new source for tube socks, wait for the supplier to get more in stock or refund the cost of the items to the customer. A reliable drop shipper will have several sources for each other products listed on their page.
Drop shipping also puts you at the mercy of your suppliers. If they make mistakes while fulfilling orders, the onus falls on you to take responsibility and apologize to your customers. In today’s age of instant communication, being known for bad customer service is not something a fledgling organization can survive.
Ultimately, your methods for procuring product are entirely up to you. However, if you are looking for a low-cost, effective way to manage products without a warehouse—look no further than drop shipping.
With all of this now in mind, the most important thing for any ecommerce or drop shipping based business, is to find the right products to sell. In previous years, this was quite task. Many online sellers have deals with direct distributors and privately purchase and ship items on drop shipping deals. Now the game has completely changed, thanks to sites like AliExpress. With millions of products on the site and thousands of merchants to choose from, there is definitely something for everyone on this site — most of which are easily set up for drop shipping based businesses.
If you wanted to get started with a drop shipping business of your own, all it would take is setting up an online store (using a platform like Shopify), integrating your products (user Oberlo) and then setting up a payment/shopping cart system (Samcart / Paypal) to accept payments and you are ready to go.
How to Start a Drop Shipping Business in 2017
As you can see, there is a whole world of potential out there when it comes to selling online, and drop shipping is just another option for you to consider. My best advice for anyone looking to get started, is to make sure they have a business model and marketing plan in place. It’s one thing to have an online store where you can sell products, it’s another to know how to market it and acquire new customers at a profit.
My name is Zac Johnson and I have been an online entrepreneur for the past 18 years and blogger since 2007. This is my personal blog and I welcome you to the site. In full disclosure, it is safe to assume that I am benefiting financially or otherwise from everything you click on, read, or look at while on my website.
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