Starting a Wholesale Dropship Business
Getting the overview of drop ship businesses and what steps are involved in starting one is what you need to do in wanting to open a wholesale dropship business.
Drop shipping is a technique in supply management in which the retailer does not stock in goods.
Rather, he or she transfers the orders being made by customers and the details of a shipment to either a direct manufacturer or a wholesaler. Then, the latter ships the goods ordered to the customer directly. Like other retail businesses, the profit comes from the difference between the prices of wholesale and retail.
When and where does drop shipping occur? Drop shipping can occur in small businesses, online auctions, and custom products. In small businesses, drop shipping takes place when it receives a bulk order for a single product and the retailer arranges for the goods to allow the shipment of products from the manufacturer directly to the customer. Online auctions sites, like eBay, also engage in drop shipping. What usually happens is the seller lists an item as new and ships the product directly to the highest bidder from the wholesaler. When a manufacturer specifically produces a custom product for a certain retailer and drop ships it, private label drop shipping occurs.
What are the benefits of starting a wholesale drop ship business? This type of business eliminates the need for inventory and usually produces a cash-flow that is positive, even in its start-up phase. The cash flow is positive because transactions are paid. Engaging in a wholesale drop ship business is a very cost-efficient move. Since you do not need an inventory and a corresponding management to it, you will be able to save a lot of money you can use for other important things in your business. Also, efforts are also saved which in turns minimizes costs for inventory management and shipping. After the sales, you would not be liable for any other payment.
What steps are involved in starting a wholesale drop ship business? In just like any business, the first step is the conduct of a market research. You have to know more about the drop ship business, your competition, and the in’s and out’s of the business. Also, you would want to know if the products or goods you are selling would be easily sold. Usually, sales on the internet are easier to do. The order fulfillment is what makes it difficult. Selling through the use of internet is usually done as a mail order meaning shipments are received by customers in small packages.
Once the order is placed, you have to pick, pack and as well as ship the products and goods. Because the distributor or the manufacturers take in charge with the costs and the responsibilities regarding the products, costs are significantly reduced off the retailer’s tab.
Being a drop shipper entails transparency. To establish this, you can send out labels and forms to your regular customers so that they can be assured that the product has never been touched. By this way, your customers are also assured that the package is from you. The end result of this move is that most customers resort to thinking that their seller owns a warehouse from where they get their supplies of products and goods.
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