Benefits of Wholesale Drop Shipping

October 26, 2011 1 By Koehler Home Decor

Drop shipping is a supply chain management technique where the retailer doesn’t keep product in stock, but instead transfers customer orders and shipment details to either the manufacturer or a wholesaler, who subsequently ships the product directly to the customer. The majority of retailers make their profit on the difference between the wholesale and retail price. Some retailers earn an agreed upon share of the sales as a commission, paid by the wholesaler to the retailer.

There are numerous benefits to drop shipping. Two substantial benefits of drop shipping are the elimination of the need for upfront inventory and an immediate positive cash-flow cycle because the seller is paid when the purchase is made. Other benefits of drop shipping include the process streamlining, since only one warehouse will handle the product, potentially reducing total inventory management and shipping costs. Cost reductions can reduce the price to the end consumer.

Drop shipping, where a manufacturer or distributor ships a product to a consumer on behalf of the retailer can be very attractive since it helps to minimize risk and cost while offering added convenience and practicality. Here are some other benefits of drop shipping you may not have considered.

Less Risk
• You don’t need cash up front to acquire any inventory which means that if your business does not pan out, the only money you’ve lost is typically what you spent to launch your website.
• No excess inventory means your business is less susceptible to loss of revenue as a result of sudden shifts in tastes or trends.
• You can offer lower volume niche products as well as popular best sellers since it doesn’t coast you anything additional.

Lower Cost
• You can easily launch new products since they do not require an investment before purchase.
• You may receive more competitive shipping rates through a drop shipper than you would shipping your own packages.
• Less product gets damaged during shipment using drop shipping because you are only shipping the product once.

More Convenient
• You don’t have to deal with the hassle of packing of products and preparing them for shipment.
• You don’t need a storage facility or retail location—only a website where your items will be sold.
• You can now offer items that are impractical to store like large products, perishable products, etc.

Remember, many drop shippers will allow you to use your own or at least generic shipping labels so customers won’t even know you’re using a drop shipper! The increase in drop shipping providers has made it easier than ever to start your own online store! Now that you know and understand the many benefits of drop shipping, the only question is why aren’t you making money with your own online store? There are a few questions that you must ask yourself before getting started, like what products you would like to market and how to attract customers, but using drop shipping can take care of many of the headaches normally associated with inventory management.

Koehler Home Décor dropships wholesale home decor accessories free!

You May Also Enjoy