Guide to Dropshipping
Dropshipping is a form of retail business in which the seller accepts customer orders without keeping stock on hand. Instead, in a form of supply chain management, the seller transfers the orders and their shipment details either to the manufacturer, a wholesaler, another retailer, or a fulfilment house, which then ships the goods directly to the customer.
Benefits
There are at least five good reasons that almost any ecommerce retailer should consider dropshipping.
- Minimizes startup risks
- Lowers product costs
- Lower storage and logistics costs
- A broad product offering
- Flexibility
Service
The seller is responsible for marketing and selling the product, but has limited control over product quality, storage, inventory management, or shipping. By doing this, it eliminates the costs of maintaining warehouses – or even a storefront – purchasing and storing inventory, and employing necessary staff for such functions. As in any other form of retail, the seller makes profit on the difference between an item’s wholesale and retail price, less any pertinent selling, merchant, or shipping fees accruing against them.
Overview
Dropshipping has become a popular business model as it requires minimal initial investment and overhead costs. A dropshipping operation can be managed from any location with an internet connection. However, dropshipping also has its drawbacks, including lower profit margins, less control over the quality of the products sold and an increased risk of shipping delays or supply chain issues.
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