| What is drop shipping? | | | | find space to store the materials until you need |
| Drop shipping is when you, as a retailer take | | | | them. |
| orders and a product distributor takes care of all | | | | Disadvantages of Drop Shipping |
| the shipping for you. You don't have to order | | | | 1. Can be Costly |
| stock in bulk and the stock remains with the | | | | Most distributors will charge a seller for the cost |
| distributor. All you have to do when you make a | | | | of the labor and materials involved in drop shipping |
| sale is contact your distributor and they pack up | | | | and this is generally between $2 and $5 per item. |
| the item and send it straight to the customer | | | | Many new sellers do not include the additional |
| with your company label on the box. | | | | costs of drop shipping in their pricing model and |
| Drop shipping is a very popular option because it | | | | find that their addition greatly reduce their profit |
| takes a lot of the grunt work out of selling on | | | | margins, causing the drop shipping operation to be |
| eBay or even setting up your own online store. | | | | unviable. |
| However, for new sellers, there can be some | | | | 2. You are still responsible for any shipping |
| major downsides to drop shipping. | | | | problems |
| Advantages of Drop Shipping | | | | As the front for the business, any issues with the |
| 1. No storage required | | | | shipping will be yours to manage and rectify. This |
| As you aren't purchasing stock to ship, you don't | | | | includes shipping delays and damaged items. Such |
| have to store your products in your house or | | | | issues can affect your reputation as a reliable |
| have a dedicated storage area. This becomes | | | | vendor. |
| very important if you are selling large items such | | | | 3. Hard to find a distributor who will do it and do it |
| as kit-sets, furniture, sporting goods etc. | | | | well |
| 2. One set of shipping costs | | | | Finding a distributor who will drop ship and drop |
| As you are not purchasing stock from the | | | | ship reliably can be difficult. Many distributors will |
| distributor, you don't have to pay a carrier to | | | | not drop ship because of the extra paperwork |
| bring stock from the distributor to your own | | | | involved whilst others may not exercise sufficient |
| storage area. The only shipping costs are those to | | | | care in the packing and handling of shipments. |
| ship the product directly to your customer - this | | | | 4. Low stock levels can cause delivery delays |
| can mean that your sales price is lower because | | | | Many drop shippers won't tell you that they are |
| you don't have recover shipping fees. | | | | running low on stock, which means you can't tell |
| 3. Spend more time on other areas of your | | | | your customers about possibly shipping delays |
| business | | | | before they order. If your distributor runs out and |
| When you have a dropshipping arrangement with | | | | the products have to back ordered, you may end |
| a distributor, you aren't spending time packaging | | | | up spending a great deal of time placating a bunch |
| up the purchases or getting to the post shop to | | | | of unhappy and impatient customers. |
| send the packages. This allows you more time to | | | | Certainly, drop shipping is a very appealing |
| spend on the other parts of your business like | | | | prospect for many sellers however, the process |
| marketing and strategic planning. | | | | may not always a realistic one. Despite the hassle, |
| 4. No packaging materials required | | | | extra costs and storage issues, 'doing it yourself' |
| Not only do you save money by not having to | | | | can often be a more sensible option and easier to |
| order packaging materials, you also don't have to | | | | manage overall. |