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Six Benefits of Drop Shipping

  • April 8, 2021

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drop shipping

Have you always dreamed of running an e-commerce business? The largest number of individuals forego their dreams of becoming entrepreneurs due to budget constraints. 

Nevertheless, the drop shipping business model eliminates the need for inventory and storage by skipping the standard distribution channels. Instead of retailers, suppliers are in charge of fulfilling orders and having them drop-shipped to customers. 

Once a customer makes a purchase on your e-store, the order is sent to the suppliers responsible for drop shipping. After sending the order details, retailers transfer all responsibilities to the suppliers, who prepare the orders and drop-ship them to consumers. 

Nowadays, there are numerous full-service marketing agencies, such as the Canopy Management team, providing brilliant tips and insights for selling on Amazon.

If not familiar with the drop shipping method, learn more about its benefits below.

Low investment

The majority of retailers consider inventory one of the most demanding aspects of commencing a business. Inventory investments account for the largest part of startup capital, requiring aspiring business owners to invest thousands of dollars into this aspect. In order to stock a warehouse, merchants need plenty of capital, which increases the risk of getting into debt. 

Drop shipping, on the other hand, eliminates the need for inventory investments. This retail method doesn’t require retailers to purchase products until they are ordered by customers. Unless customers pay for the products, merchants have no obligation to invest in inventory. Consequently, the level of risk and startup costs are rather low. 

Drop shipping is an ideal method for individuals interested in starting an e-commerce business but having limited budgets. Instead of spending their money on inventory, retailers can use their budget for growing their business. Drop shipping stores are the perfect solution for businessmen with low capital who desperately look for an opportunity to try their luck in the e-commerce world. 

No wasted time and money

Convenience is undeniably the most crucial benefit of using the drop shipping method to run an e-commerce business. Retailers save plenty on time by not having to manage a warehouse, as well as save money by not paying for one to store their products. Drop shipping excludes the tasks of packing and shipping orders, which are incredibly time-consuming. 

Besides packing, owners of traditional businesses are also obliged to track their inventories, cope with returns, and make sure stock levels are optimal. Additionally, the offices of drop shipping businesses aren’t limited to a single location. Retailers are only required to have a high-quality internet location to run their business from any corner of the globe. It’s all they need to communicate with their clients and suppliers. Click here to learn about the procedure and development of drop shipping. 

Flexibility

Drop shipping provides businessmen with flexibility, which is one of the most desired qualities in modern businesses. Imagine running a business while being free to travel the world. Regardless of how unfeasible it sounds; this scenario is viable by implementing the drop shipping method. 

As long as you are connected to the internet, your office can be located anywhere in the world, on a beach, in a tent, in a travel trailer, on your kitchen table, etc. The opportunities offered by flexibility are endless, provided you maintain good communication with customers and manufacturers. 

Another aspect of drop shipping flexibility is the possibility for merchants to collaborate with multiple suppliers. Retailers can offer a variety of products to customers due to their partnership with manufacturers of different goods. In contrast, individuals running traditional stores invest in a limited number of products in order to purchase large quantities.

Easy to scale

There is a major difference between brick-and-mortar and drop shipping businesses in terms of scalability. As the number of orders increases, the workload is on the rise as well. In order to keep up with the increasing number of orders, brick-and-mortar store owners have to spend more time packing the products, delivering them to clients, and handling potential returns. 

As far as drop shipping businesses are concerned, the largest part of the work is handled by suppliers. They are responsible for packing the products and having them shipped to the correct addresses, while your workload remains almost the same. You are only likely to experience extra work in the field of customer support because of the increased number of customers. Nevertheless, it’s just a drop in the ocean when compared to the increase in the workload of suppliers.

Easy to test

Another remarkable benefit of drop shipping is the opportunity for business owners to test the interest of customers. It refers to testing their interest for the launch of your new store or the introduction of new categories of products. This kind of testing requires no additional expenses on the part of retailers, as they just have to list new products on their sites to check the opinion of customers. 

When running a brick-and-mortar store, business owners have no other alternative but to make an investment. Consequently, they run the risk of purchasing inventory without knowing whether the customers will be attracted by the new product line. 

Lower risk

Many individuals give up on their dream of becoming store owners due to the high risk involved in the process. Most of them are worried they might not be able to sell the inventory they have purchased and get stuck with it. 

Fortunately, when it comes to drop shipping, overhead expenses are surprisingly low. There is no need for business owners to invest in inventory or warehouse management, hence saving a lot of money on capital. Most retailers base their businesses at home, eliminating the cost of monthly rent. 

Moreover, there is a much lower risk involved when making updates to the inventory. You will not be obliged to pay a cent for the new products you introduce unless customers decide to make a purchase. Consequently, you will have an opportunity to test a myriad of products without worrying about your budget. 

Final thoughts

Drop shipping is a method worth considering for individuals with high aspirations but low capital.

Take the opportunity without risking too much!

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