The advent of web stores and e-commerce has reshaped the brick and mortar business. Online shopping has improved the user experience and has positively impacted the consumer’s way of life. Such transition has compelled the brick and mortar business to make their presence felt online or convert to brick and click business, thus bringing an onslaught of opportunities and hurdles. And one of the biggest hurdle of them being storage and shipping.
As delivering the product to the customers, is one of the major responsibilities, web-stores should take storing and transporting expenses into consideration while deciding the price of various products. Also, as they would be catering to a larger population base, they need to ensure that they have ample stocks, which in turn would require larger storage facilities. So how would they increase their presence with least investment? The answer is drop shipping.
What is drop shipping?
Drop shipping can be defined as a supply chain management system. In general retail business, retailers buy products or commodities from wholesalers or manufacturers and in turn sell them to customers. In doing so, they are awarded a handsome profit. But in drop shipping, when a retailer gets an order or product purchase request from customers, they redirect their orders to wholesalers or manufacturers. They after receiving the request from the retailers, ship the product directly to the address specified by the customers. In this way, manufacturers keep the majority of the profit and retailers enjoy a modest commission on every purchase.
What are the benefits?
It is said that 10% of something is better than 100% of nothing. The mere concept of drop shipping was so profitable and efficient, that it spread like wildfire in the global market. Drop shipping service provides an opportunity for both the manufacturers as well the retailers to be mutually benefitted by the endeavour. Some of the most noteworthy benefits of drop shipping are as follows:
– Retailers need not think about product shipping or have to endure any hassle pertaining to storage or preservation of products.
– Web store owners or online auctioneers can act as retailers and only have to think about getting the audience attention towards their online store, and eventually make them purchase a commodity.
– Wholesalers can provide their complete attention towards the production line and ensuring the quality of the products, as the marketing and potential customers are provided by the retailers.
– Business risk is cut down and user satisfaction is increased.
– If a brick and mortar business has an online store that provides services to the customers as well, in terms of shortage of products, the businessman can make a deal with some other brick and mortar store. In this way, in-spite of product shortage, the web-store owner continues to cater to the online audience by providing them the items from some other store. This enhances customer satisfaction and favours the interest of both businessmen.
– Thanks to drop shipping, the initial investment for retailers or brick and click businesses is minimal.
Drop Shipping Tips
Drop shipping is somewhat similar to a symbiotic relation between the retailer and wholesaler. And if both of them agree to the terms they can provide top-notch service to the customers easily.
– The first step while setting up a drop shipping business is to create an elegant web store which would be handled by the retailer or seller. Using this web-store, customers can view the various products available, and they can purchase whichever commodity they please.
– After adding the items to the cart, they provide their shipping details, personal information and make payments. The payment and other details are received by the retailer.
– Then the retailer channels the customer, payment and product details to the wholesaler. The manufacturer then picks & packs the product from his warehouse and ships the same to the shipping address.
Significance of Drop shipping
For drop shipping service, the customer is isolated from the manufacturer, but they only deal and interacts with the retailer. This channelled flow of information from the customer to retailer and then to the wholesaler ensures negligible communication gap.
The online seller is more focussed on enhancing the user experience of the web-store and marketing the same to attract new customers while the manufacturer gets input from the retailer and acts accordingly. This distribution of roles is the reason why drop shipping is so significant in today’s market.
In a nutshell, drop shipping has provided a distinct edge to the online shopping experience. They aid in cost cutting for online retailers and ensures a steady flow of customers for the wholesalers. Such is the potential of this service that even online biggies like eBay prefers drop shipping services. Considering the benefits associated with it, it will continue gaining popularity among various web-store owners.
