Dropshipping entails you setting up your own ecommerce shop and reaching out to suppliers who take your orders and ship those orders to your customers.In short, it’s designed so that you don’t have to house any inventory, and you don’t have to worry about any shipping costs or logistics.
In the drop shipping scenario:
- (1) The customer pays you for the product.
- (2) Only after you get the money from the customer, you pay the supplier to fulfill the order.
- (3) The supplier sends the final product directly to the customer.
Advantages of Dropshipping
Upfront Costs. As an online retailer, you have a virtual store and dropshipping allows you to have a virtual inventory too. This way, you don’t have to outlay mountains of capital to buy products in bulk or meet minimum purchase requirements and you don’t have any warehousing costs either.
Bulky Items. Certain product types lend themselves to dropshipping, especially big or bulky items. These items are expensive to receive, store and ship back out, so it makes a lot of sense to dropship them straight from the manufacturer.
Location. The location of certain suppliers can also provide a geographic shipping cost advantage for you.
Dropshipping and Shopify. Shopify makes it really easy to make sure your orders get to your drop ship supplier. Your dropshipper will receive the order information as soon as an order is placed and lets your supplier know to send items. There are even apps that will let you sync your inventory with your dropshipper.
From the day an entrepreneur starts a business, he exposes himself to certain risks. Even before the first employee is hired, a business is at risk, making it important to have the right insurance in place.