The Top Line Meets The Bottom Line

We all know that the top line of your business is how much you take in - your gross income

. It's that lovely number which is all too quick to fade, as expenses creep (or more often, jump) in, and your profits begin to resemble your net - which is generally more of a butterfly net than a fishing net. And speaking of that net, it all comes down to a figure that's affectionately known as your bottom line. You know that one, don't you? It's the figure that slowly shrivels up, as expenses leap out of the woodwork like Al Bundy's Children on the old TV show "Married With Children."

When you use a drop shipper, your top line and your bottom line can converge in a way that you might not expect at first. After all, does it really make sense that you could save money by hiring somebody else for a task as vital as logistical support? When you consider that any company which is tasked with storing, picking, packing and shipping your products to your customers will charge you a percentage for that service, it would seem as though the entire process would be a huge money drain. It could do horrible things to your bottom line - at least in theory. But fortunately, theory and reality are never entirely one and the same.

Drop shippers do charge you for every item they process. The bad news is that inevitably, you do have to "pay the piper." But since that is pretty much the only bad news, you're doing alright. The good news greatly overwhelms the bad, because you only pay the drop shipper a percentage of what you make. Simply put, if you make nothing, they make nothing, so you aren't having to keep them on some kind of retainer or salary. This can save you a fortune, considering what it would cost to keep a fully staffed warehouse ready for whenever you sell one of your products. This is great for your bottom line, because it has virtually no waste in it.

Another really good thing about working with a drop shipper is that they know how to ship things efficiently. If you are a marketing person, you should focus on driving the sales. It's what you're good at, after all. And just like every business needs people in the mail room, the marketing department and in all of the other areas who have different skills, you need to focus on what you're good at. The fact that a drop shipping company does nothing but logistics means that they can do so extremely well - and often, extremely cheaply. While this does benefit your bottom line, this fact also impacts how much you can charge your customers (a lower amount, in many cases).

Considering that a drop shipper can help you make more sales, and can ultimately reduce the amount of money you end up paying for them, they're a pretty good investment. Your auditor will probably like that... even if you're the kind of operation where "the auditor" is your cat.

by: Kirsty Hale

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