You’ve ordered a pretty dress online and it arrives at your home in fewer than two days. As a customer, you think that the ecommerce website probably sent an email to its warehouse. The warehouse staff then packed and mailed the product to the correct destination and you got your dress on time. That was then, but most ecommerce websites now use drop shipping to get their customers their products quickly and efficiently. You might be wondering what drop shipping is and how does it work but this is not something unique or innovative. The drop shipping method can save the retailer and the customer a lot of time and money, and it is effective.
So what is Drop Shipping and How Does it Work?
Traditionally, websites had local warehouses where they stored their goods. When customers placed an order, the POS, or point of sale, system on the website notified the warehouse and warehouse workers would pack and ship the item. However, this was expensive. It became even more expensive when large websites started stocking third-party goods. This meant they had to contact vendors individually get their goods and store them in a warehouse until customer orders came through. Drop shipping changed all that. The website no longer has to store goods and the vendor can store goods with them. When a customer order comes through the website, the website will notify the vendor and the vendor packs and ships the item to the customer. As everyone is invested in the process, vendors are paid quickly, the website gets successful, and the customer gets his product on time, states Flippa.
Does Drop Shipping Have any Benefits?
- Smaller Inventory – For website owners, drop shipping is very useful. They no longer have to invest in inventory, as goods are stored with the vendor at the vendor’s warehouse. Website owners also now do not have to worry about maintaining a warehouse and warehouse staff, and it can save them a lot of money.
- Expanding Website – The website owner can now retail thousands of products from vendors located all over the world and they do not have to worry about shipping costs.
- Ready-To-Sell Data – As the goods are stored with the vendor, the website owner has no idea how the product looks. The vendor supplies a written product description, high quality images, shipping weight, dimensions, price and inventory. This can really streamline the website and ensure regular product updates on the website and high-volume sales.
- Lower Customer Costs – As an incentive, most vendors also provide free shipping and on minimum orders or clubbed orders. This brings down the price of the item and it can be very good for the customer.
- Immediate Shipping and Delivery – The POS system on the website can be completely automated and sales are processed quickly. For example, when an order is placed for ‘x’ vendor, the POS notifies the vendor. A shipping label and invoice customized to your ecommerce store is supplied to the vendor who will ship the item immediately. As orders are placed and processed quickly, shipping and delivery is fast and effective.
- Highly Scalable – Drop shipping has no limits. It can be used to ship small items like clothes and shoes and large items like washing machines, air conditioners and even refrigerators depending on the vendor and his shipping costs.
- Reliable Model – Drop shipping is reliable and website owners can trust the vendors to pack and ship items quickly to maintain sales and their personal reputations.
Drawbacks of Drop Shipping
Drop shipping does work but it is by no means a perfect solution. For website owners, the problem starts with no control over the shipping and delivery process. Sometimes, the supplier or the vendor may run out of products and this may result in a shipping delay. The supplier or vendor will charge you, the website owner, shipping and storage charges and this may add to your overall costs. As a website owner, you cannot change the overall cost of the product, as the vendor determines price, and this may affect what discounts you can offer. However, these are small drawbacks that can easily be overcome by a hands-on website owner.
Will Drop Shipping Work for Retailers?
Shipping and delivery are a critical aspect for any website and if the business can deliver goods quickly and accurately, it can make the website an immediate success. Drop shipping is popular as the vendor is motivated to ship the items quickly and it does ensure success. However, it is not right to assume that every eCommerce website will switch over to drop shipping, as large retailers like Amazon still prefer to pack and ship their items themselves. Drop shipping is an affordable and simple option for new websites and it can ensure that goods reach the customer on time but the actual choice of a shipping method will depend on the website and its goods.