What is Dropshipping?

When running an e-business, there can be an advantage to not shipping your parcels directly to you. This process is known as dropshipping.

The biggest advantage to dropshipping is in regards to zero inventory shops. As most e-businesses don’t keep stock on hand (it’s just more economical to not keep inventory on hand if you can help it, and most e-businesses don’t have to), they need to ship their goods directly from the producer to the customer. By using dropshipping, and setting up the client as the final destination, the e-business owner can get the customer the product that they bought.

The classic example of dropshipping is that a buyer buys a shirt from an eBay seller. The shirt is from a print-on-demand company, and so the seller needs to order the shirt, and then send to the buyer’s address. By using dropshipping, the seller can buy the shirt using the funds acquired from the sale, and then send the shirt to the buyer.

Thus, the business owner doesn’t need to maintain an inventory, which means that he doesn’t need to spend money on renting the storage space, and can worry more about sales and advertising. Used wisely, dropshipping is obviously a major advantage.

However, not all companies will drop products, and others make dropshipping difficult. For example, in the example above, the shirt company may limit the number of addresses you can use, which can limit the number of products the owner can sell. Also, some companies frown on using dropshipping; for example, some auction sites require there be an actual object to sell in the seller’s possessions, which obviously isn’t the case in this situation.

Dropshipping can be an advantage, but be aware of the potential issues involved for your business.

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