As a retailer online, if you need to expand your products but do not want additional inventory, dropshipping might just be the answer for you. The dropshipping business is usually manufacturer, wholesaler, and shipper. When you join up with a dropshipping operation, you can order a number of products or, in some cases, only one.
These businesses vary so you will have to understand their terms. Once you have chosen the products you want to sell and a customer has purchased an item, you will give the dropshipper the customer’s address for shipping. You can have one or more dropshippers without investing any money for the inventory. You can offer only a few popular items or as many as you wish.
There really is not a problem if a specific item sells quickly or is on your site for a longer period of time. Unlike inventory items you personally have, there are no holding costs.
Selling Your Own Inventory And Inventory From A Dropshipper!
If you are a retailer and offer your own inventory on a site or a mail order business, you know that once a customer buys and pays for an item you must package it and ship it out in a timely manner. The beauty of using dropshippers, you can incorporate their inventory along with your own. When someone pays for inventory, held by a dropshipper, you place the order through them, they will package and ship the item to your customer.
How Dropshipping Works!
You must develop a good relationship with your dropshipper. A good working relationship is valuable because you are relying on them to get the right item to the right customer. You will add pictures and descriptions on your site and/or in your catalog.
Once your receive an order from one of your customers, you will sign into your account with the dropshipper. You will place the order with them and provide the customer’s address for shipment of the package.
That’s why it is critical that you have a dropshipper you can trust to fulfill the order correctly and get it to the right customer and address in a timely manner.That’s really the entire process on your end. The time you invest is entering the order on the dropshipper’s processing system.
You are not involved in packaging or shipping!From that moment on, it’s in the hands of the dropshipper. They will package up the items and update their order system to show when the items were shipped.
Choose Your Dropshipping company or companies carefully!
1) You should shop around before committing yourself to any dropshipper. Keep in mind, your customers are relying on you to get the merchandise they have purchased from you. Therefore, you must be sure the dropshipping company always has the inventory in stock. You want to be sure they provide high-quality merchandise, not cheap junk. Keep in mind, your customers have no idea where their orders are coming from only that your business name is associated with the inventory.
2) There is nothing more frustrating than having an order placed by a customer and you have to tell them the item is on back order because it’s out of stock! If a dropshipping company cannot maintain all their inventory all the time, you will have to make sure you have a real-time updated list of inventory in order to update your site and catalog. This will take up a great deal of time and you could run the risk of something falling through the cracks.
3) When scouting for good dropshipping companies, ask direct questions, check out their track record, and read reviews from other retailers regarding their satisfaction with the companies.
4) You want a company that will ship quickly! The last thing you need is a customer waiting forever to receive items they have paid for. It’s up to you to make sure you have a dropshipper who guarantees delivery in a timely manner. If a customer contacts you stating their order was never delivered, you need to make sure another order is shipped to them at no charge to the customer. Depending on the dropshipper, they may require you pay an insurance fee for guaranteed delivery or maybe they don’t. Either way, you must make sure you have a 100% delivery guarantee promise from the dropshipper.
5) Another important issue, make sure the dropshipper provides an easy to use order placement and status verification system. You must be able to go into their system, place your orders, and verify when the items have been shipped out.Make sure the dropshipping company does not include their own business cards or catalogs with the orders. You do not want a company that maintains their own mailing list of your customers. These customers are yours and you are the only one who should benefit from it. You are the one who acquired your customers, not the dropshipper.
6) When interviewing dropshippers, make sure the pricing will give you a decent profit. Many dropshipping companies will offer you discounts that are as good as their wholesale prices. Some will match their best wholesale rates.Depending on the types of inventory you want to sell, you might be able to get a few samples to ensure the dropshipper’s inventory is top rate. Your customers are not going to be pleased if you describe items as high-quality and they receive junk! Again, as far as the customer is concerned, your name is associated with the item.
Determine If Dropshipping Is For You!
There are many factors to take into consideration when deciding if this is the right avenue for your retail business. Many have already been discussed but there are other factors to consider before making a decision.
Can you adjust to a certain separation between yourself and your customers? Unlike shipping directly from your retail store, you will not have the ability to include inserts in your orders, sale notices, catalogs, etc.Will the fee structure work for you? When you ship through a dropshipper, you pay the shipping fees and, in some cases, a per order dropshipping fee. You need to seriously consider your profit margin. Will it be sufficient once you subtract all costs for the orders, including payments to the company, and any additional fees. Some of these fees could include credit card processing if applicable.
Another consideration, if one customer orders various items that come from different companies, you will have to pay the shipping and fulfillment fees for each additional company. Will these fees affect your profit per order?
You must take into consideration all the above information that has been provided in order to determine if dropshipping is for you. Take your time to find the best dropshipping companies and only work with those who are reputable. There are many very good dropshipping companies but there are also many very poor ones. Doing your homework, asking the right questions, and looking into what other retailers have said about the dropshippers. Dropshipping is a great way to add to your inventory and bottom line profit without risks on your part.
If you are seriously considering expanding your business, you should give dropshipping a thought. Weigh the pros and cons of dropshipping vs investing in thousands of added inventory to your store. Weigh the pros and cons of waiting for inventory to sell and the time and expensive of packaging and shipping on your own. Check out our How It Works Page