What is Drop Shipping and Why is it a Trend
Through the course of a year, you will hear about a lot of new trends that emerge in the eCommerce space. One of the trends that will come up in 2019 is drop shipping, a method that many eCommerce merchants are starting to use.
Today, we will look at what drop shipping is and why it is a growing trend in the eCommerce industry.
Drop shipping is a fulfillment method in the eCommerce retail space. The method of drop shipping is that a customer will complete a purchase through an eCommerce merchant. That merchant does not actually carry the item in stock but rather buys it from a third-party and ships it directly to the customer. Rather than owning inventory and trying to move it, the merchant purchases on an as-needed basis, never actually handling the product.
Why is this a growing trend? It is very easy to start using drop shipping and it can help save money. By using drop shipping, you take out a lot of other tasks that can go with the daily grind of running a business that involves retail, even if it is just an eCommerce business. You don’t have to manage a warehouse, you don’t have to worry about packing or shipping, and you don’t have inventory to track.
You can certainly save a lot of money, especially early on because rather than investing a large amount of capital in inventory from the start, you can start an eCommerce business without having to invest a large sum of money.
By not having to purchase inventory or manage a warehouse, you can also avoid a lot of overhead charges. Expenses will always grow as a business gets larger, but by running so much simply through a laptop in a home office, you can still have much less of overhead than a traditional brick-and-mortar store.
People who use drop shipping are also able to sell a much larger range of goods because they don’t need to pre-purchase them. Drop shipping businesses are also capable of being flexible and run in any location and can be easy to scale.
Of course, there are some disadvantages to drop shipping. Margins on products you sell through third-parties can leave low margins and not much of a profit for you, especially if you are just starting out, and the items you list may not always be in stock. Since you won’t be managing a warehouse or keeping inventory, there is no way to be completely certain that an item is always in stock.
Drop shipping is far from a perfect method, but for people who are just starting out and want to begin developing an eCommerce business, it is a great option for allowing someone to jump in without much of a budget. With the right planning and strategy, you can turn your drop shipping business into a success and start profiting from the results.
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