What does it mean to drop ship?

With the popularity of the internet and the development of E-commerce, online shopping has become an irresistible trend. The emergence of a large number of shopping platforms, making the online shop has become a fashion. Fast, stable, and high-quality supplies can continue to meet the needs of agents, and it is necessary to shorten the procurement process in order to obtain greater profits.

Many people don’t know what is drop ship item? Drop shipping is a new method of supply chain management, it also is called “0 risk purchase method”. It means the retailer (agent, reseller) no longer need inventory when selling products, instead, the supplier (wholesales, providers) sends the product directly to the customer. The result is that the seller has never seen or processed the physical product. So it is possible to begin your business online with limited funds.

How does drop shipping works?

In order to understand the operation mode of drop shipping more intuitively, the following shows a picture.

1. First, the customer purchases an item from your store.

2. Then, you get the order and forward to your supplier. Pay to the supplier the corresponding amount.

3. At last, when the supplier determines your payment, and ships directly to your customer.

From the wholesaler direct to the consumer, drop shipping has fewer intermediate links than the traditional retail model and greatly reduces the cost of the product itself. 

Benefits

1. A small amount of start-up capital. 

As just said the biggest advantages of doing drop shipping is that there is no inventory. For the online shop, the biggest risk is the shortage of funds caused by large amounts of inventory, and some products are time-sensitive and not suitable for storage. For example, the trend products. Once the trend has passed, no one will buy it. Products can’t be stored for a long time, such as the health medicines or the food. If the product expires, you can only destroy it, in the six months before the product expires, you need to start doing promotions. So this is one of the most important advantages for drop shipping.

2. A broad range of product offering. 

A merchant can have dozens of options in his store if he has drop shipping arrangements in place with suppliers. This is a very favorable factor and also a way of attracting some potential customers to the shore.

3. Easy to start and save time. 

If you choose to do drop shipping, then you don’t need to deal with physical product, it’s easier when you running an e-commerce business be you don’t need to worry about:

①　Product packaging and tracking

②　Warehouse management

③　Processing returns

④　Tariff issues (if you are doing international business)

⑤　Product description and picture

Because you don’t need to worry about all of the above, you can spend more time optimizing your store and increasing your store’s visibility to increase your sales.

4. Flexible work place. 

You can work anywhere that you like, but it must have an internet connection, in that case, because you can communicate with your customers or suppliers while managing your business.

5. Commodity prices are more transparent and online transactions are more convenient. 

It is very convenient to do “the quality and price of the product are compared with many shores” on the internet, so that commodity prices no longer have a “gray” component, Sitting at home by online trading can receive the goods, eliminating the need for back and forth visiting the store, shopping trouble.

Disadvantages

After understanding dropshipping benefits, maybe you want to ask if it has disadvantages? There is no perfect thing in the world, even if drop shipping is so simple and convenient. It also has disadvantages.

1. Intense competition. 

With the development of E-commerce, the competition between each shopping platform is increasing day by day. Like Amazon, eBay, AliExpress and other major E-commerce shopping platform are fiercely intense. According to the data, as of April 11 last year, AliExpress announced that the number of overseas buyers worldwide has exceeded 100 million. According to the data provided by AliExpress, it currently covers more than 220 countries and regions in the world, with over 60 million active buyers in the past 12 months and 59.3% in the mobile terminal. Although drop shipping has various advantages compared to traditional sales models, it also faces fierce challenges.

2. Customers service issues.

No contact with physical product, it is not unclear how the product quality, packaging, and attribute characteristics of the supplier send to your customer. When the product or logistics problems, after-sales service is difficult to do, if you can’t handle it, it is easy to get a bad review.

3. Store product details are the same. 

Generally do distribution, rarely have to design their own shops. Most of them directly use the data packets provided by distributors. Therefore, the homepage and details page of most stores same is the same as other shops that distribute this product. Nothing new in the shop, too much competition in the same section.

4. Risk of customer loss. 

If the supplier doesn’t provide a blind drop shipping, then your customers are likely just a one-time customer. Because your customers maybe know the supplier’s information, and your customers will choose the supplier with a lower price than you.

5. Can’t control inventory. 

As a negative aspect without inventory pressure, at the same time there are certain deficiencies. Because there is no own warehouse to manage the inventory, there is no way to control the inventory, and there may be cases where the supplier’s inventory is not available and the customer’s order cannot be shipped.

So is drop shipping worth doing?

As everyone knows, one thing can never be perfect, as long as it has a positive side and then it also has a negative side. The same is true for drop shipping. When you choose do drop shipping, not only need to knowwhat does status drop ship mean, but also you must both play its advantage and avoid its disadvantage. Fortunately, drop shipping as a new and popular method selling, even though it has many problems, but at the same time the problem is being solved.

After reading this article, I want to ask you a question: do you dropship? if you answer is yes, I will recommend a platform for you to make your business online more convenient and easy.

Chinabrands is a foreign trade resources distribution platform, it provides dropship, you don’t need to worry about packaging and shipping, there are more than 100 warehouses in more than 20 countries and regions in the world, of which 10,000 are covered by logistics lines. It has more than one million products, including clothing, electronic accessories, baby products and more than 100 categories products.