It might just be the best decision you’ve made so far; transforming your brick-and-mortar store into an e-commerce outlet. You now have a wider customer base and the ability to sell round the clock — things that wouldn’t have been possible with a physical storefront. However, the excitement of running an online storefront is beginning to wear off. You’re starting to see how competitive the landscape is, and have realized that you need to evolve soon or else fall behind the curve. It’s time to adopt the dropshipping model.
What is Dropshipping?
What is Dropshipping, is a retail practice that involves selling products without keeping them in stock. You still have an online storefront that displays all the products you offer, just like a standard e-commerce outlet. But unlike the latter, you don’t keep any inventory at hand. When someone places an order, you get in touch with your supplier (either the manufacturer or a wholesaler) and have them ship the product directly to the customer on your behalf. In essence, dropshipping is an arrangement where you rely on your suppliers for order fulfillment.
The Advantages of Dropshipping
Adopting the dropshipping model can benefit your business in several ways:
- More working capital: Wouldn’t it be convenient to run your store without having a chunk of your working capital tied up in inventory? Dropshipping will let you do it. By not having to purchase inventory upfront, you’re able to free up liquidity for other operations.
- Lower overheads: Think of all the costs you incur in managing inventory; handling, storage, etc. Dropshipping makes it possible to shrink these expenses or even avoid them altogether.
- Less risk: Not having to stock up means you’ll be less susceptible to loss of revenue due to products going bad or out of fashion while still in your inventory.
- More room to scale: Dropshipping gives you more freedom to evolve your product catalog. You can add test out new products without committing to a large amount of inventory.
- Peace of mind: Picture those agonizing moments when you receive a whole bunch of orders you hadn’t anticipated. Dropshipping will let you outsource all the extra hassle to your suppliers.
Perhaps the biggest advantage of the What is Dropshipping is that it doesn’t require much in terms of the initial investment. Basically, all you need to do is get in touch with a supplier and come to an agreement. Just be sure to do your homework when researching dropshipping companies.
