Dec 13, 2008

Guide to dropship marketing

What is dropship?

Drop shipment or drop shipping is a type of retailing where the retailer does not keep goods in stock, but instead passes the customer's order and shipment details to the wholesaler, who then dispatches the goods to the customer directly. The retailer makes their profit on the difference between the wholesale and retail price.

Advantages of dropshipping

Drop shipping can be a very simple and effective way to get started in ecommerce. Many online merchants find dropshipping strategies are good way of minimizing stock holding, decreasing overall shipping costs and cutting down on delivery times to customers.

No need to hold stock

Drop shipping allows web site owners to send single or low quantity unit orders gathered on their web sites to manufacturers, or wholesale warehouses, who in turn ship the items directly to the customers of the web site owner. Typically you take care of the promotion and collect the payment, and the drop shipper looks after order fulfillment.

You buy at a low wholesale price

Drop shippers can buy in huge volumes this means they will be able to offer you the best prices on products and shipping, usually wholesale.

No money up front to buy stock

There's no capital investment, no need to invest in stock and no danger of you suddenly having large stocks you are unable to sell.

You can sell a wider product range without buying stock

Using drop shipping allows you great flexibility in terms of product range. Promote as much or as little as you wish.

No need to worry about inventory and delivery

You can focus on listening to the market and discovering the products your visitors want to buy.

Disadvantages of dropshipping

Prices

Don't accept that the first drop shipper you come across will give you the best deal you should shop around.

Drop ship fees and charges

It's important to know all the costs involved so you can calculate your profit margins accurately. Any wholesale company that wants to charge you a regular "participation" fee should be avoided - the only time you should have to pay a dropship company anything is in connection with a specific order.

Shipping

Is the drop shipper using a reputable shipping company o deliver the goods? Where will they ship to?

Accounts

Will the drop shipping company automatically debit your credit card on each order you submit, or can you get monthly payment terms?

Support, returns and refunds

The last thing you'll want is to be caught up in a nasty situation where you have a number of returns - and have to foot the bill. Ask the dropshipping company about their returns policy, what kind of support they'll offer you for their products and about any guarantees associated with their products - and get it in writing.

Credibility

How long have the drop shippers been around for? Do they respond to your requests for information rapidly and professionally? Young dropship companies and wholesalers have the habit of going bust quickly, or growing too rapidly and as a consequence basic good customer service suffers.

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