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Drop shipping is a distribution method used mainly by online businesses to fulfill customer orders from their e-commerce website. With a dropship program, the retailers do not carry any stock, instead all of the products are held as inventory by wholesalers or sometimes even the manufacturers. As soon as an order is placed, the online retailer collects shipping information and payment then transfers the customer order to the drop shipper to befulfilled. They are then responsible for shipping all of the items that are ordered out to the customer. The online retailer earns the profit margin from the wholesale and retail prices.
Drop shipping is a great way to start an online business if you don't have much upfront capital. In fact several home based businesses have grown to be very successful using this technique to sell online. The first thing you must do is find suitable vendors to get involved with. There are a wide variety of vendors to select from, but not all of them are reliable. This step appears to be pretty simple, but apparently finding the right vendor for your dropship program can make or break your business. You should focus on researching all applicable vendors and selecting ones that you think are a good fit for you. Think of it as a partnership, you handle getting the order and the vendor takes care of the rest. The only way to have a smooth running e-commerce business with satisfied customers is if both parts work in unison.
The first step is coming up with a list of possible vendors to use for your dropship program. Search for vendors that supply products you are interested in for your e-commerce site and then find out if it's well known and reputable. How long have they been in business? Do they have the ability to deliver what they promise? Can you make a profit based on the price you are getting the goods for? After you picked out the best of the bunch, contact them about their services and try to order a few products. Then eliminate some by comparing the quality of each product, the delivery time, how fast they respond to inquiries and their ability to customize the packing slip and shipping label to match your business logo.
After making your decision on which vendors to use, you must make sure that your e-commerce solution is able to manage your dropship program. Make sure the following features are provided:
- QuickBooks integration for easy POS management and tracking
- Create unlimited amount of vendors
- Automatically contact vendors when their products are ordered
- Real-time shipping calculations based on drop ship location and carrier
- Vendors have their own admin area to add products or update inventory
People usually choose to use a dropship program for their business, because of the freedom it offers and low level of risk involved. There are a few disadvantages such as not having control over the merchandise and not being the only retailer they work with. However there are also many advantages for building this type of business. Here are just a few:
- Little to no inventory
- Saves time by letting someone else handle the order fulfillment
- Saves money by not requiring a lot of overhead cost
- Product images and details are already available for you to use on your site
- Huge selection of products to choose from which allows you to sell more than you could on your own
Finding an e-commerce solution with an efficient and reliable drop ship tool is crucial to the success of your online retail business. You can't simply hope for reliable drop ship vendors, the only way to guarantee that they are properly doing their job is to be able to track and manage their activities from your store admin.
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