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Is Drop Shipping Right For You?

If you’re in online sales, drop shipping may be a viable way for you to go. In today’s economy, when cash is tight and credit is even tighter, many businesses are turning to drop shipping because it offers a way to maintain and grow without an outlay of capital up front.

How does this work? The definition of drop shipping, according to Wikipedia, is this:

Drop shipping 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.

Some of the benefits to drop shipping are:

  • Drop shipping allows a business to sell products that they do not have in physical inventory. This means money saved on storage space to house inventory, plus a saving of space, period. By not having to actually have the product on hand, a business will save money by only fulfilling orders as they come in. If a product isn’t selling, the business can simply discontinue that particular product from their online store and stop offering it. Alternatively, they can let the item remain in their online catalog or listing of items for sale and just take whatever sales come along, even if they’re coming in slowly. Since in drop shipping, a business doesn’t pay for an item sold until it’s sold and the money collected from the customer, there’s really no risk in simply letting the slow-sale item remain.

  • Drop shipping allows a business to offer a much greater variety of items for sale than it might ordinarily be able to stock on its own.

  • Drop shipping eliminates the time and expense involved in shipping items as sold by the business owner or employees. As each item is sold, the business owner places the order with the drop shipper and the drop shipper then packages and sends the order to the customer. In some cases, the drop shipper will arrange to have the item shipped directly from the manufacturer. If you’ve ever ordered online from Amazon or a similar site, you’ve probably received items that were shipped from the manufacturer itself.

  • Drop shipping start-up cost is minimal. Because a business only pays for items as sold, there is no need to spend a lot of money up front, purchasing items for resale. Since a business doesn’t pay for an item until it is sold and the money collected from the customer, there is little to no risk in buying inventory that may sit there on the virtual shelf and never sell.

  • Drop shipping allows a business to focus more time and effort on ramping up sales with various marketing and selling techniques, thus increasing sales.

Even in the current economy, perhaps even more so because of the current economy, drop shipping may be the way to start, build and maintain a successful, profitable online business!


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