Dropshipping is a method of fulfilling orders where the retailer doesn’t have the actual products in inventory but relies on manufacturers or wholesalers to ship the products to customers instead. This strategy has several advantages to online merchants, making it an attractive income-generating arrangement relevant to the modern age.

Dropshipping has become a popular path for budding entrepreneurs for a good reason. Imagine having the capability to start a store without having to pay for inventory upfront! Thanks to modern technology, entrepreneurs can access e-commerce sites and create Shopify dropshipping stores to help them ship orders within minutes.

How Dropshipping Offers Success in Businesses

Truth be told, stories about quitting a day job and running a business from home are not all that uncommon. Some of these stories credit dropshipping for allowing people to actually exit the corporate world and earn money from wherever they are in the world simply by staying connected to the internet.

When you read success stories concerning dropshipping and how entrepreneurs had successfully employed this strategy, these are the main draws:

Low Starting Cost

You don’t have to cover the cost of producing your own products or buy wholesale. With dropshipping, you can start selling with little to no investment needed.

Scalability

You have the power to add new products or test them quickly without having to spend money on ordering products in bulk. This minimizes the risk of failing a product launch, which we all know entails capital expenditure.

Improved Cash Flow

Given you don’t actually have the products on hand, you don’t pay for it until someone buys it.

Limitless Inventory

Dropshipping was created in order to help prevent suppliers and retailers having to succumb to inventory distortion. This refers to the multi-billion dollar problem of out of stock shelves and overstock clearances. Getting access to inventory directly from the source means you get to have limitless inventory.

Allows Expansion into New Markets

A problem for most entrepreneurs is the cost of importing products. Dropshipping eliminates this challenge by allowing partnership between sellers and strategically located suppliers, wherein local sellers are given access to similar products and be able to ship them quickly. This gives them the freedom to test a product first to see if it’s worth importing.

Gain Customer Loyalty

Since you are capable of giving your customers a consistent supply of products and add new ones regularly, existing customers are more likely to put their trust in you and prefer you over the others. A good example is Costco, which has fine-tuned dropshipping to not only encourage customers to buy more things from them but also to retain and earn loyalty by offering the best possible buying experience.

Reduced Overall Costs

Each time you need access to a certain product in the supply chain, you should expect cost along with it. This includes LTL and FTL services, port operations, ocean freight services, and warehouse employees — all these are part of the Cost of Goods Sold. If your products are dropshipped, however, you’ll notice that a portion of product offering would net higher profit margins.

Ready to Dropship?

Dropshopping as a business model offers flexibility that cannot be attained without it. This method allows merchants to be their own boss wherever and whenever they want as long as they are connected to the internet. Moreover, it offers the chance to partner with multiple wholesale suppliers all at the same time in order to offer a wide range of products to their customers. As for manufacturers, they are guaranteed of consistent product movement. It’s a win-win situation.

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Albert Macklin
Albert Macklin is a tech enthusiast who enjoys learning about new programs for growing businesses. This curiosity has led him to research and write about a variety of topics related to business, computers, and technology.

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