Drop shipping and using a ship to order system for all of your shipping needs has many benefits. This method of order fulfillment can dramatically reduce the amount your company has to spend on inventory management and can result in happier customers.
Drop shipping, also known as ship to order, allows you to advertise products on your site that you do not have in stock. In fact, you don’t have anything in stock. Your store is like a catalogue and when people see something they like, they buy it from you. When you receive the purchase order, your drop shipper receives one as well and they act as a warehouse and order fulfillment service for your business. Many of these services will even put your stickers on the packages so customers will not even realize you’re using a drop ship or ship to order service.
Consider the following benefits of drop shipping and, if you decide this seems like the model for you, you can move on to identifying your niche, deciding which company to contract shipping services with and developing your web presence.
Simplifies the Start-Up Phase
Using a drop shipping service means that you do not have to invest in a whole lot of inventory up front. While most traditional businesses would have to buy a stock of inventory to get their business off the ground, you simply need to invest in a web site and take the time to find a service that will move the shipment where you need it to go.
Lessens Risk of Changing Tastes
Even in the event that your business works out wonderfully, using a drop shipping or ship to order service mitigates the risk you face of consumer’s changing tastes.
McDonald’s offers a perfect example of consumer’s changing tastes affecting a company. Throughout the late 90s and into the 00s, the public started to become aware of the perils of heavy fast food consumption. As a reaction to this knowledge, more and more restaurants and grocers started to carry organic foods and products for health-conscious consumers. McDonald’s, which has been the subject of much scrutiny due to the contents of its food, had to invest in inventories of organic and healthy options that they were not necessarily sure would even pan out or appeal to customers. Because ship to order and drop shipping companies do not have to invest in stocks that have a chance of spoiling or going obsolete, this would not be an issue.
Economies of Scale
Most ship to order services are able to attain better shipping rates than small businesses simply due to the volume of packages they send out. Since you are saving on shipping you can pass the savings on to your customers, and since many consumers are looking to save nickels and dimes wherever they can, this will not go unnoticed.
Drop shipping and ship to order services are not full proof. Like any business, these models require constant attention. Lazy management can lead to inefficiencies that will lessen your bottom line. With that in mind, drop shipping can be a great way to get your business of the ground.