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What is Dropshipping?: Understanding Dropshipping 2021 Guide

Published in eCommerce Fulfillment

Online payments-based selling, or eCommerce, has been an effective and popular option for businesses to provide service for customers all around the world. With eCommerce, sellers are able to deliver the physical products to the customer easily and faster via a drop shipping service. 

Drop shipping is now a trending business model. Businesses no longer need to keep products in stock in a warehouse or at their home business. With drop shipping, businesses can have an online store, sell products, and or accepts payments. They then pass the sales order to a third-party supplier, who then creates the product, packages, and delivers the order to the customer. 

The convenience of only paying when a customer places an order can is only one attractive feature to sellers.

Why Do Businesses Use Drop Shipping?

Drop shipping is actually a preferred option for businesses. This is mainly because of the lower risk business model. This business modle allows the business to sell the products to the customers without dealing with running costs of warehouses, warehouse safety, support, and re-ordering burdens. 

Furthermore, because of lower upfront costs, drop shipping is a relatively “easy” way to start an eCommerce business. 

How Does Drop Shipping Work?

Below we’ll outline the drop shipping process, its pros and cons, and where to find a provider. 

1. Customer Places an Order

After marketing your products, orders will come through to your eCommerce store. Next, while at your checkout, your point of sale system will create an order.

2. The Order Is Processed and Sent to Your Drop shipping Company

After the order is created, it sends the order summary to your chosen drop shipping company.  Using automated or manual methods, the store will pass the order details on. The orders will go to your supplier. Also, the order will include the customer’s product, quantity, and delivery details.

3. The Supplier Prepares the Order

Now that your order is received by your supplier, what happens next? Well, with your supplier receiving orders from your store, the supplier will white-label itself.

White-labeling allows you to drop ship and even brand your orders. When the supplier starts packing the customer order, they will use your marketing materials instead of theirs.

4. The Supplier Ships Your Products Directly to the Customers

After packaging your orders, shipping it is next! Your drop shipping supplier doesn’t stop after they ship your products. The company will also, track shipments and handle any returns once it leaves the warehouse.

Drop Shipping Pros and Cons

Now that you know how dropshipping works! Let’s take a look at the benefits and drawbacks of working with this business model. 

First Up, The Pros 

Many eCommerce businesses tend to lean toward a drop shipping business model because of the lowered risk and minimal investment. However, take a look at the pros and see how this business model could work for you. 

Minimum Initial Investment

For starters, the main advantage of this business model is that it’s affordable to start. While most business ventures call for a lot of capital, this one normally requires minimum capital upfront.

In other words, you usually don’t need to put in a huge amount of capital to start drop shipping. As mentioned earlier, you usually do not have to purchase a product unless a buyer has placed an order and made the payment through your eCommerce store. 

For example, you’re an artist and would like to print your work on multiple mediums like canvas, t-shirts, mugs, and more. Instead of purchasing, printing, storing, and shipping your items – you can leave this all to a drop shipping company who handles creating your items per individual order. 

A Fast and Easy Method to Sell Online

eCommerce business is much easier for the store when it doesn’t require storing physical products. With drop shipping, your provider handles managing the warehouse, packing and shipping your orders, tracking, processing inventory, handling returns, inbound shipments, maintaining availability, and reordering. 

Also, because businesses don’t have to deal with purchasing inventory or managing a warehouse, expenses are significantly low. Moreover, these kinds of eCommerce stores are operated as home-based businesses, requiring little more than a laptop and a few recurring expenses to run the business.

Drop shipping is a useful fulfillment method for both launching a new store and for businesses looking to test new products. The main benefit of drop shipping is the ability to list and potentially sell products before committing to buying a large amount of inventory. 

By effectively leveraging suppliers, most of the work to process additional orders will be borne by the suppliers, allowing the businesses to expand with minimum growing efforts and less incremental work.

Flexible Location

A drop shipping business can be run from just about anywhere with an internet connection. If the business can communicate with suppliers and customers easily, the business can run and manage the business.

Offer Your Customers a Wide Range of Products to Purchase

Since you normally do not have to pre-purchase items, you can offer an array of trending products to potential customers. Check with your drop shipper to see what new products they are offering and how you could incorporate them into your business. 

Lastly, The Cons

While the pros seem like an easy route to start your online business, there are some disadvantages to on demand small runs of your products. 

Lower Profit Margins 

A drop shipping business can typically see around 10-20% of their selling price in profit. While this could be a lucrative business for some, wholesaling your products will always be more cost effective per item but also involves upfront costs to purchase a large run of items.

High competition 

With the growing popularity of drop shipping and eCommerce, the competition is continually growing limiting the profitability.

What’s Next: Drop Shipping with Print Bind Ship

Our staff is always ready and waiting for your inquiry to get your designing, printing, custom packaging and international shipping work started as an effective fulfillment service. You can simply drop us a message via our contact form with the step-by-step action to get your work started immediately and deliver with the best quality as per your expectation. If you’re looking for a credible printing, designing, custom packaging, and international shipping service, we are the perfect choice to get your eCommerce drop shipping business started instantly.

Useful High-Quality Fulfillment Services Provided by Print Bind Ship

  • Custom Packaging
  • Design Services
  • Binding and Printing Services
  • International Shipping
  • Fulfillment Discounts
  • Free with Shipping Offers

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