If you are an e-commerce merchant interested in keeping your overhead expenses down, dropshipping can be an excellent cost-saving measure. Dropshipping is a method of order fulfillment where a distributor or manufacturer ships the purchased product to the consumer on behalf of the seller.
Dropshipping can be a very appealing solution for startups, small businesses or companies based from a home office. Here are a few ways dropshipping can benefit your business.
A retailer who uses dropshipping is not tied to the physical limits of a warehouse or the number of fulfillment employees. You can easily manage sales fluctuations. If you have a seasonal product, for example, you won’t have to maintain an empty facility for part of the year. You also won’t need to worry about hiring seasonal help or keeping staff busy during slow business periods.
Dropshipping allows you to manage your business from anywhere. With access to dropshipping software, you can oversee orders, automate shipment tracking, address listings and record data. If you need to relocate, for example, or run your business from a home office, you have the flexibility to do so without the worry of selling a property or breaking a lease. You can also adjust your product offerings quickly, adding or removing them as market demands change.
Decreased Inventory Management
You can reduce or eliminate your inventory management expenses by dropshipping. You won’t need to worry about storing, tracking or shipping your products — your supplier handles those duties for you. It can also benefit you if you sell items that are hard to store, such as large products that consume a lot of storage space or perishable items that need to be kept in a temperature-controlled facility.
Reduced Product Fulfillment
Packing and shipping products can take a lot of time and care. Fulfilling orders, packaging products, and checking shipping addresses takes time, and you can avoid worrying about the labor costs of fulfillment. Depending on the company you use, you may be able to supply your own shipping labels, meaning that customers won’t know you are working with a third party to fulfill orders.
Increased Product Offerings
Small businesses may not have the resources to store various products or even large quantities of the same product. With dropshipping, your fulfillment company handles the storage for you. You can expand and decrease your inventory with minimum hassle or risk. If you want to offer niche products alongside your best sellers, for example, you can gradually introduce new products, starting with smaller quantities.
Lower Startup Expenses
Raising capital is often a big endeavor for a startup company. Sometimes it can become a barrier. If you don’t have the funds for a brick-and-mortar store, large warehouse or several employees, dropshipping can help. You can get running with a lower amount of capital and use the funds you have to market your business, build your website or perform other essential functions.
An e-commerce presence can reach customers around the world. If you want to increase your audience, you can work with wholesale buyers with online and brick-and-mortar stores.
Dropshipping is a business model that has extensive, proven success. Even some of the world’s largest retailers use dropshipping to fulfill orders. Many online stores, large and small, reap the benefits that dropshipping offers.
Working With Dropshippers
If you’re ready to find a dropshipping company, keep in mind a few best practices:
- Look for a company with representatives who know the product and industry.
- Ensure the supplier maintains current technology.
- A company in a central location can reach customers across the country within a few days, allowing you to fulfill orders quickly.
- Before contacting potential dropshipping companies, make sure your business is legally established and ready to operate.
Dropshipping can help you start your new business or save your existing company the time and expense of managing inventory. As more companies offer dropshipping, you can extend your choices and increase your chance of success.