Everything you need to know about drop-shipping

If anything at all, COVID 19 acquainted us with numerous terms in business and kind we’d never come across before. Drop-shipping is one of them. It’ll be only unfair to not notice the importance of the term and how it has been impacting businesses these days in the new adaptive digital world post-COVID 19.

How do we define drop-shipping?

Among the prevalent retail models in market today, drop-shipping and standard retail model can be differentiated in the way they operate. Drop-shipping can be an attachment to the standard retail model given how it works. It is when a store doesn’t keep the products it sells in stock. However, when an order is placed, it buys the item from a third party like the manufacturer or seller and has it shipped to the customer.

Hence, the seller doesn’t have to sell his products directly but through businesses that follow the drop-shipping model. Here, we can see that the drop-shipping company is completely dependent on the wholesaler or manufacturer to satisfy its customers.

Why drop-shipping?

For booming start-ups, drop-shipping can be a gift given the limited downside while experimenting with different business ideas. It’s a great learning process in the beginning. However there are a lot of other benefits to drop-shipping to the likes of-

1. Lower capital investment

It’s usually comfortable to start anew with lower investment in the inventory. Although you need a lot of trusting wholesalers who would be willing to supply products on order. In drop-shipping, you don’t have to purchase any product upfront unless you’ve made sale and have been paid by the customer. It becomes a safe business idea.

2. Easy to start

With drop shipping you don’t have to be looking into the matters of managing a warehouse, packing and shipping, tracking inventory for accounting details or continually ordering products unless any order is placed.

3. Lower overhead expenses

One doesn’t have to invest in overhead expenses in drop-shipping model given it doesn’t need inventory maintenance. Sometimes it can be carried out within the limits of your home with just your laptop and a few recurring expenses.

4. Favorable location

You don’t need to operate from an office or warehouse given that all it requires is your laptop and a few expenses to track your orders and shipping them to the given address.

5. Greater product variety

As your business wouldn’t be holding on to an inventory and would be ordering products from direct manufacturers, your businesses are more likely to hold on to a greater variety of products and rope in more customers.

How does it work with Shopify?

Shopify is a leading ecommerce platform for online retailers with more than a million users selling a variety of products via drop-shipping. What Shopify offers is that it is extremely user-friendly and works with numerous apps specifically designed for drop-shipping. It also has a great set of features other than just a platform to trigger sales.

One can also make payments, track shipments, engage in marketing, develop an abandoned-cart strategy and view analytics. While the basic features are available at $29 per month, all features can be availed at $299 per month.

Drop-shipping can merely be a fulfillment model and not a stress-free way for a successful online business. Hard work is always required to start any business. Usually drop-shipping is beneficial and booms faster. Typically, drop-shippers are able to make 10-40% profit per sale, making around $1000-$50,000 a month.

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