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What is Drop Shipping? And what are the Benefits?

By August 30, 2019 Marketing
Ship going off into the ocean from a rocky coast

You’re a colonial in early America, history for this country is just beginning but you don’t have time to think about it. You have to get your sister’s shoes to her by next month’s Sunday, or she won’t have them for an important wedding. The only problem is that she lives across the ocean and you have no time to swim across the vast sea. Instead, you wrap the shoes up in a lovely parcel and drop them off onto a ship so it can sail across the sea and get to her in less than a month’s time. Thank goodness you had the option of dropping off the package on a ship, someone else can get the package to her and the fateful Sunday is saved.

Back to the present day: besides the fact that dropping off the package on a ship is similar to the words ‘drop ship’ the ideas, though similar, aren’t exactly the same. So the question becomes, what exactly does it mean to drop ship something? Since Google always explains things best we’ll quote them here:

 “Drop shipping is a supply chain management method in which the retailer does not keep goods in stock but instead transfers the customer orders and shipment details to either the manufacturer, another retailer, or a wholesaler, who then ships the goods directly to the customer.”

In other words, drop shipping is a strategy for order fulfilment where the retailer does not have the product in its personal inventory. Instead, they rely on outside wholesalers or manufacturers to ship orders directly to the customer. So what are the benefits of this magical system you wonder?

5 main benefits to Drop Shipping

A Broad Product Offering

If you are selling something to the public and have your brand in different locations than there are more people you can sell to. For example, if you have a t-shirt company and sell your product at Adidas and Apple you can market your t-shirt brand more openly to the shoe company and the technology company.

Come to Market More Quickly

The more people want your product, the more you can get revenue for the product. However, if it’s just through your company that you sell your product, there won’t be as much of it in stock. Therefore, selling it through a second party means you can get more of your product out into the world.

Explore New Lines

Using the drop shipping method, a company can test out strategies without bringing in the extra inventory. In other words, the second company that sells your product enables the original company to explore and open new opportunities that wouldn’t have been explorable beforehand.

Reduce Your Investment

A dropshipping investment doesn’t require an upfront agreement with the customer, the retailer has the ability to step away. Therefore, the retailer is committing less time and energy to the product and will be able to explore other avenues.

More Time

Allowing a manufacturer to assist your company in sending your product out will allow for a bit of a buffer. The buyer will be happier since the product is getting them so fast because of the second company assisting you in your work.

Like always though, there are downsides such as confusion for any part of this equation (retailer, manufacturer, customer). 

In short, however, drop shipping has its ups and downs. It has the potential to be very beneficial but may not be for everyone. In an even shorter summary: drop shipping is a retailer allowing a manufactory to sell their product and ship it off to the customer once ordered.

Kylee Marin

Author Kylee Marin

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