What is Dropshipping?
Dropshipping is an online sales methodology in which it is not necessary to have the products in stock since the supplier sends the products directly to the final customer, managing its own inventory. To do this, you must send the supplier all the details of the customer you have purchased: the details of the order and the shipping details.
Customers in the online store will not notice when using drop shipping as the labels are customized in design and sender address.
This allows online stores to partner with the manufacturer, also known as the “Dropshipper”, rather than purchasing a large amount of inventory (which can be very expensive) through pre-negotiation.
Drop shipping is revolutionizing the way traditional logistics work in online stores, as they are only responsible for purely administrative functions, such as order management, collections, customer service, among others.
The way this system would work would be:
A person places an order and pays for a product from an online store.
The online store informs the manufacturer of this order so that he can send the products directly from his warehouse to the final consumer, with the stationery from the online store.
The manufacturer charges the online store the cost of the product plus shipping commission (drop shipper).
The Dropshipper makes the online store a simple intermediary and its profits will be the commissions earned on all sales.
Oberlo allows an online store to implement a dropshipping strategy by allowing them to import products into a store and ship them directly to your customers with just a few clicks.
Advantages of drop shipping for the online shop
The main advantages of adopting a Dropshipping model in an e-shop are:
Inventory costs in online stores are significantly lowered because they are borne by the supplier. Within these costs, the risk of products that are never sold or have low turnover is reduced.
The successful launch and growth of an online store require a lot more effort than just designing and building a website. Drop shipping allows electronic stores to avoid having to deal with shipping and delivery, making it a very efficient option for companies with limited resources.
Generally, when an e-business wants to start selling a product, it must wait until it has received it from the supplier before it can publish it on its website. Drop shipping allows that when you decide you want an item in the online store, you can publish it immediately.
A wider catalog can be offered
Drop shipping allows online stores to offer a wider catalog of products which will significantly increase sales as the products are published on the website and the supplier takes care of everything else once the order is placed by the drop shipper.
New products are tested without risk
Drop shipping allows you to test new products in the catalog and reduce to zero the risk of not selling them already in stock with the supplier.
Predicting what the customer will like is a permanent challenge for e-commerce, so having the ability to try without making an investment becomes a competitive advantage.
Time is saved in the logistical process
For most online stores, organizing inventory and preparing it for shipping is often a time-consuming activity.
When the supplier takes on these tasks they save significant time in the online store in labeling, packaging, shipping, which allows the drop shipper to focus on other more convenient activities on their website, such as creating a blog where they can contribute valuable content for potential customers of your brand, make marketing strategies to attract the audience of interest, among others.
Drop shipping allows electronic stores to significantly reduce (even reduce to zero) storage holds as it will be the responsibility of the manufacturer.