Though this is a very generic term used in online businesses, yet very few people are actually familiar with the concept.
To put it simply, this is for eCommerce models that enables the company to sell goods without having to actually maintain the inventory. In this, the retailers do not have to worry about various things like
- Keeping inventory
- Having a warehouse
- Ship Products to customers, etc.
So how does all this functions get taken care of?
There is a dropship supplier, which handles all these functions. Retailers connect with such a dropship supplier, who either manufactures or warehouses the products. And then these suppliers manage all the functions – storing the products and shipping them to the end customers of the retailers. And when you are dealing with products which have low shelf life or are sensitive, like vape, then going with drop shipping model is the best option.
How it works?
Before anything else, the retailers need to have an online eCommerce store for Drop Shipping to work. Now getting into the details, here is how this drop shipping model works.
- Customers place an order on the retailer’s online store.
- The customer and product details are forwarded to the drop ship supplier.
- The supplier packages the product and ships it at the customer’s address.
This way, all a retailer does is – act as an intermediary. No products are stored with the retailers, but the purchasing happens through them.
Advantages of Drop Shipping
With this model, the retailer gets a lot of advantages over having a traditional store.To name a few,
- There is no need for a physical office space. Retailers can operate from anywhere in the world. All they need is a computer and internet.
- This model is extremely easy to set up. Along with the hardware and a website, you just need to find a suitable and reliable supplier, and you are good to go.
- Extremely low cost of setting up, with no overhead costs like rent, electricity, etc.
- The risks in this business are reduced.
- Lowered risk of damaged products, since very few movements are needed to be done from manufacturer to end customer.