New Holy Grail For Dropship Supplier
Then what is dropshipping?
Then what is dropshipping?
Dropshipping is a supply chain management technique in which the retailer does not keep goods in stock, but instead transfers customer orders and shipment details to either the manufacturer or a wholesaler, who then ships the goods directly to the customer. As in all retail businesses, the retailers make their profit on the difference between the wholesale and retail price. Then how it works?
Some dropshipping retailers may keep "show" items on display in stores, so that customers can inspect an item similar to those that they can purchase. Other retailers may provide only a catalogue or website. Retailers that drop ship merchandise from wholesalers may take measures to hide this fact to avoid any stigma, or to keep the wholesale source from becoming widely known. This can be achieved by "blind shipping" (shipping merchandise without a return address), or "private label shipping" (having merchandise shipped from the wholesaler with a return address customized to the retailer). A customized packing slip may also be included by the wholesaler, indicating the retailer's company name, logo, and/or contact information.
Wholesalers- the
dropship supplier.
Most of time, wholesalers will play a very important role in the procedure of drop-shipping, who build bridges between the manufacturers and the retailers. There're multiple ways to build connections, such as some drop-ship suppliers will build their own drop-shipping websites for the drop-shipping retailers, allowing them to display products and helping them to ship the goods directly to the needed customer, which can make much profits from the different price between the resources and the destinations. Take Nearby Express as an example, this company is a affiliate of Sunvally which founded in 2001, who creates their personnel website nearby (http://www.nearbyexpress.com) which can supply the dropshippers (i.e. drop-shipping retailers) all-around services with professional ERP system.
What the most featured part of this company is the international warehouse in the North American and European countries, which means time-saving and money saving in logistics. Therefore, it's a very common thing to get a competitive price in this website and make healthy profits. As their logo saying, it is 'the best drop-shipping solution!'
When comes to dropship supplier, there're three issues we need to pay attention.
Firstly, Small Business
Drop shipping can occur when a small retailer who typically sells in small quantities to the general public receives a single large order for a product. Rather than route the shipment through the retail store, the retailer may arrange for the goods to be shipped directly to the customer. Drop shipping is also very common with big ticket items like steel buildings where the retailer will take a deposit and have the building shipped direct to the buyer's building site from the supplier's manufacturing facility.
Secondly, Online Auctions
Many sellers on online auction sites, such as eBay, also drop ship. Often, a seller will list an item as new and ship the item directly from the wholesaler to the highest bidder. The seller profits from the difference between the winning bid and the wholesale price, minus any selling and merchant fees from the auction site. A seller is permitted by eBay to list items that are currently not in his/her own possession, provided that he/she follows eBay's policy on pre-sale items.
The third one, Custom products
An emerging trend in the drop ship business is private label drop shipping, in which a manufacturer produces a custom item for a retailer and drop ships it. The range of private label drop shipped items varies from simple key chains and t-shirts with custom logos or pictures to customized formulations for vitamins and nutritional supplements.
At last, let's have a short acknowledgement of the development of dropshipping. Major dropshipping suppliers and fulfillment services are primarily based in the USA. Since 2006 many drop ship companies have emerged in China, many of which offer wholesale and dropshipping services to both companies and individuals. This is largely due to the increasing ease of e-procurement and larger part that internet plays in ecommerce. China-based drop ship suppliers have increasingly been able to compete with same-country distributors due to improving logistics for small packets and easing of trade barriers.
Why should you choose dropshipping? Two significant benefits of drop shipping are the elimination of upfront inventory and a positive cash-flow cycle. A positive cash flow cycle occurs because the seller is paid when the purchase is made. The seller usually pays the wholesaler using a credit card or credit terms. Therefore, there is a period of time in which the seller has the customer's money, but has not yet paid the wholesaler.
Dropshipping also eliminates some duplication of effort, since only one warehouse will pick, pack and ship the product. This approach can reduce total inventory management and shipping costs. These cost reductions can subsequently reduce the price to the consumer.
You may ask me 'Is there any risks for dropshipping?' The answer is 'yes!' As the old saying goes, one cut has two sides. As in any business, some risks are involved in drop shipping. For example, back ordering may occur when a seller places a shipment request with a wholesaler, but the product is sold out. Back ordering may be accompanied by a long wait for a shipment while the wholesaler waits for new products, which may reflect badly on the retailer. A good wholesaler will keep retailers updated, but it is the business owner's job to be aware of the quantities that the wholesaler has available.
Dropshipping has also featured prominently in some Internet-based home business scams. Scam artists will promote drop shipping as a lucrative 'work from home opportunity.' The victim who buys into this scam will be sold a list of businesses from which drop-shipment orders can be placed. These businesses may not be wholesalers, but other businesses or individuals acting as middlemen between retailers and wholesalers, with no product of their own to sell. These middlemen often charge prices that leave little profit margin for the victim, and require a regular fee for the retailer's usage of their services.
Though there're some disadvantages in dropshipping service, the advantages weigh out of it! If you're a dropshipper, you'll be surprised by the healthy profits from the zero stock and zero risk products, if you're a wholesaler, you'll be pleased by the most convenient logistics and payments. All in all, it's really a wonderful choice to make money!
by: unababy
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