Merchants should be wary of posing vendors offering false “wholesale” prices hoping to take advantage of new sellers. Drop shipping is now a more popular, feasible practice. Merchants must be diligent about who they decide to work with. Some drop ship companies attract sellers with low wholesale price of items, but make their money by tacking on outrageous shipping charges. This helps to accurately set prices in your store. It is important that you know the total price of every drop shipped item (the product, shipping, etc.). Sellers need to understand the prices of the wholesaler they work with. A supplier should be transparent about shipping schedules, but that is not always the case. If a customer asks about their order, the seller must answer. Retailers fear that they will be left in the dark about the order’s status. When an order is sent, a retailer must know the supplier received it, whether it’s in stock, and when it ships. Here are a few pitfalls that make retailers wary of the practice: Visibility and Communicationĭrop shipping relies on a tight relationship between the merchant and supplier. It’s important to know the issues that sometimes arise with drop shipping and what you can do to avoid them. However, drop shipping has problems to go along with all of its advantages. With these kinds of benefits, it’s no surprise then that so many retailers utilize this practice. New online sellers use drop shipping as a way to incur less costs and get up and running quickly.Custom products (like T-shirts) are often sent to a manufacturer that will create the item and drop ship it for the retailer.Online auction sites or sites that solely exist on the Internet will use drop shipping to manage varying orders and to save money by not requiring space to store products.They use drop shipping to avoid having to purchase wholesale items that may or may not sell. Companies that sell online may want to test items that they’re not sure will sell quickly.They don’t always have the time, money or resources – and often experience – to invest in buying and storing inventory. A business such as a blog site or non-profit, may want to supplement income by offering complementary products for sale on their web site.There are many reasons for companies to consider using drop shipping services: The best part is that the customer receives the order as if shipped by the merchant directly! The suppliers is invisible to them. The supplier receives the order and proceeds to pack and ship it to the customer. When a customer places an order, the merchant routes the order through the item’s supplier. When drop shipping, the seller does not keep goods in stock, or just a very limited amount (especially if the business maintains a brick-and-mortar location). What is Drop Shipping?ĭrop shipping relies on a relationship that exists between a seller and a manufacturer or supplier of a product. Learn how to avoid these costly mistakes that many learn the hard way. If you’re considering drop shipping, you need to understand these issues.
While drop shipping can increase sales, it can also have its share of problems.
It even works for established retailers looking to diversify their product line. It works well for merchants where purchasing inventory is risky or not affordable. Many types of retailers use drop shipping as a powerful strategy. We’ve updated it for accuracy and completeness.) (This post was originally published on July 2, 2012.
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