If you are willing to run business but worrying about stock keeping then just RELAX! Drop Shipping is the right choice for you. There are companies like HubLogix Sales , Spark Shipping , ShipperHQ, eProduct, Shippo, e-ProductPlug, Printful, Oberlo and lot more offering solutions to your problem. Let’s get deeper into it.
What Is Drop Shipping?
Drop Shipping allows the store owners to do retail business where they do not have to keep the commodities in stock. Instead, they fulfill the orders directly from a trader or producer of that product. You simply need to transfer customer’s order and shipping details to the producer. They will deliver the product and handle all the inventory and logistics for your customer.
Benefits of Drop Shipping
- You can launch the products without investing a single penny.
- Burden of logistics is transferred to Drop Shippers so it becomes hazel free, as you do not have to worry about packaging as well as shipping.
- Testing new products or enlarging your offerings in the market becomes easy as you do not have to invest in large amount for showcasing the product. You can offer thousands of items to the audience.
- Drop Shipping is easy to start and expand because, even if you have very less number of staff, it becomes easy for you to run the business.
- It offers you mobility as you do not need to worry about the product delivery nor any other things. So all you need is internet connection and you are ready to roll the business.
- Drop Shipping is trust worthy model as many of the big companies have offered wider selection of products to their customers and are earning bucks as they only need to focus on manufacturing the products, rest of the steps are handled by the Drop Shipping company like packing, shipping, invoicing, return of goods, inventory etc.
Common Problems with Drop Shipping
- Drop Shipping makes it easy for you to expand offerings for customers, but that overlaps the cut throat competition resulting in low profit margins.
- It becomes difficult for the ‘Store Owner’ and ‘Drop Shipper’ to synchronize the stock of inventory. Many times the store owners would sell an out-of-stock item to the customer.
- Drop shippers are ultimately third party for you. Whenever you involve third parties, you might end up with unsatisfying customers if they fail to deliver your product. If ever you try to hold the customers by supplying them low quality goods, as the cost will not be barred by the Drop Shipping Company, you will lose the trust of the customer for ever. Now, if you blame the Drop Shipper, it would be totally unprofessional and you would not like to end up in trap. We need to make sure that CUSTOMERS should be placed first and this should not be a long term issue.
Some learnings before you sail in the boat of Drop Shipping
What do you need to do start the Drop Shopping business in U.S?
- You need to integrate a business with your state valuing roughly $150 to $300
- You can request IRS to issue you EIN number (Employer Identification Number). This would be a free service.
- Open an account with Drop Shipper and set up a relationship with them.
How much does it cost to start the Drop Shipping business in U.S?
- You need to create your own eCommerce store which might cost you around $29 to $79 per month
- For integrating the business with your state, it will cost you $150 to $300.Your cost for running the business will fluctuate as per the circumstances but if you take the average, it would cost you around $350 to $400
How will the suppliers be paid?
It is advisable to have business credit card before you initiate any transaction with your supplier. The most preferred are Visa or MasterCard. In near future you might get an extended credit of 15 – 30 days. You can pay the supplier through cheque within 15 to 30 days.
Who will bare the shipping costs on orders?
The shipping cost will initially be barred by the Drop Shippers. Then it will get transferred to you while paying the bill issued by the Drop Shipping Company. So you have the freedom to decide how much shipping cost should be charged.
Does the order appear like it is shipped from our company?
Yes, the drop shippers will put your company’s logo and other details on the package. In any of the cases if the product gets returned, it will be directed to drop shippers only. But, the invoice will also have your company’s address so that it appears as if the package was delivered by you only.
How does the customer return the products?
Returning the goods will be a big hassle as from back-end there are three parties in the deal. ‘Buyer, Manufacturer and Supplier’. The best solution to avoid any question is you can prepare the Return Policy which the buyer has to agree upon before making the final purchase.Unique code to return the goods should be issued.There should be one Return Authority who handles such cases. That authority will inform the suppliers about the return of the product. The supplier will send you the notification along with the credit invoice. And finally you will have to return the amount to the customer who purchased the good from your site.
Who bares the shipping on returned items?
These charges differ from company to company. But the ideal way to do the business is:
- Case 1:- If the good sent is defective, the cost should be borne by the manufacturer. It is the ideal way to deal with such cases. The best way is you should also cover the shipment for returning the goods as well as shipping the new product to the customer.
- Case 2:- If the good sent is not defective, it should obviously be barred by the customer.
a) If the customer returns the good because of wrong selection, then shipping cost should be barred by him.
b) If he purchases the product due to false advertisement or wrong presentation or quality does not match his expectation then it should be barred by the manufacturer.
One of the awesome company providing Drop Shipping service
Since 2010 Sparkwire Solutions, the parent company of Spark Shipping has been developing enormous software to facilitate eCommerce site owners to automate and have great insights into their business.It is the only E-Commerce automation tool which works directly with shopping cart’s API. The exciting thing is it does not require any plugins to constantly upgrade and maintain
Drop Shipping helps you to leverage other people’s fund without investing Lakhs of rupees from your pocket. It is low investment solution for you to run the store. But there is one success key to this business. Only if you manage it correctly, it will serve you fruits in several years. You simply need to find the right supplier to work with. Negotiate the best price less than the marker value.
Just Remember: FIGURES make conclusion. Not EMOTIONS. Support yourself with awareness and you’ll go a lot further.