Drop shipping is when the product distributor takes care of all the shipping
for you. Rather than ordering stock in bulk, the stock remains with the
distributor. Then, when you make a sale, you send an email to the
distributor and they pack up the item and send it straight to the customer
with your company label on the box.
Drop shipping is a very popular option with sellers because it takes a lot
of the grunt work out of selling on eBay. However, there are some major
downsides to drop shipping - especially for new sellers.
Here's a list of the pros and cons of drop shipping so that you can make the
right decision for your business.
Drop shipping Pros
No storage room required
You don't have to fill up your living room with stock and packing
materials! This is particularly useful if you are selling large items such
as kit-sets, furniture, sporting goods, and so on.
No shipping costs getting stock delivered from the distributor
Drop shipping means you don't have to pay a carrier to bring stock from
the distributor to your own storage area, which can mean big savings in
the long term.
Spend more time on other areas of your business
You don't have to organize the packing and postage system, nor do you have
to drive to the post shop each day to post your packages. This gives you a
significant increase in time to spend on other tasks such as marketing and
communicating with customers.
No packaging required
You save money by not having to order and store packaging materials.
Drop shipping Cons
Can be Costly
You have to pay for the cost of the labor and materials involved in drop
shipping. Generally this is between $2 and $5 per item. Many new sellers
find that the additional costs of drop shipping greatly reduce their
profit margins and sometimes nullify the whole operation. This is the main
reason why drop shipping is not a viable option for some sellers.
You are still responsible for any shipping problems
So the item arrived damaged? Was there a shipping delay? You'll get the
flak for anything that goes wrong with the shipping even though it is
technically out of your control.
Hard to find a distributor who will do it and do it well
Many distributors will not drop ship because of the extra paperwork
involved. Then there is the matter of checking up on quality standards to
make sure your items are being packed correctly.
Low stock levels may cause unhappy customers
Your drop shipper won't necessarily tell you when they are running low on
stock. If they run out and have to do a back order, you may end up
spending a great deal of time placating a bunch of unhappy and impatient
Drop shipping is a very appealing prospect for many sellers; however it is
not always a realistic one. Despite the hassle, 'doing it yourself' can
often be a more sensible option financially, especially for new businesses.
About the Author:SaleHoo
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