DropShipInventory

Dropshipping Defined:

Drop shipping is a service that allows you to sell products online without having to maintain stock or ship products. This is all handled for you by the drop shipper. Through dropshipping you sell a product of your choosing, order the product from the dropship vendor who, in turn, packages the order and ships it to your customer on your behalf typically with your company details on the package making the whole process transparent to your customer. The difference between the wholesale price that you pay the drop ship supplier and the retail price that your customer pays you is your profit. This process allows even those operating a home based business to offer the same level of service that large scale vendors provide.

Many eBay sellers use dropshipping as a source of products due to the simplicity of it. Although, there are a few major downsides to drop shipping, especially for the novice seller.

Below you will find a list of both the pros and cons of using a drop ship supplier for your auction sales. Hopefully this will you help you make the a decision that is right for your business.

Drop shipping Pros

1. Storage space not needed

• You don't need to maintain space for the products that you are selling, this is especially helpful if you are selling larger items such as sporting goods, furniture and electronics.

2. No transport costs

• With drop shipping you do not have to pay to have the product delivered to your own storage facilities, nor do you have to pay fuel or delivery costs to transport the item to the shipping carrier. Over the long term the savings can be substantial.

3. More free time to concentrate on other business tasks

• Without having to package items and deliver them to your shipping carrier each day you have more time to spend on other business related tasks such as customer relations and marketing.

4. No packaging required

• Using a drop ship vendor you save money by not having to keep packaging materials on hand. Through drop shipping you save time by not having to package your products.

Drop shipping Cons

1. Drop Ship fees can consume your profits

• The cost of labor and materials is incorporated into the price of the product. This can often times range from $2.00 to upwards of $5.00 per item. Novice sellers may find that their profit margins decrease and may even be nullified by the additional expenses of drop shipping. Due to this, using a drop ship supplier may not be an acceptable option for some sellers.

2. If a problem arises you are still responsible

• Was there a delay in the shipping? Did the product recieve damage during shipping? You will still have to deal with these issues even though the product never was physically in your possesion.

3. Good distributors are hard to come by

• Many vendors will not drop ship due to the additional paperwork involved. Some drop ship vendors do not maintain an acceptable level of quality control during the packaging and shipping process.

4. Drop ship supplier stock levels can oftentimes cause problems

• A dropshipper may not always tell you when stock levels are low. In the event that the vendor runs out of stock and has to back order a product, you may the arduous job of pacifying many dissatisfied and impatient customers.

Drop shipping, while not always a realistic prospect, often sounds very appealing. Through it all, "doing it yourself" can often be a more financially sound decision, especially for new businesses.

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This article reprinted courtesy of SaleHoo. SaleHoo is one of the fastest growing wholesale directory websites on the internet. It contains a database of drop ship, wholesale and closeout suppliers offering thousands of products to consumers at prices considerably less than retail. Located at www.salehoo.com, visitors are allowed to sign up for unlimited and lifetime access to the completely searchable database of wholesale products and sources. The database is regularly updated, ensuring that the latest retail products are always available for purchase and SaleHoo carries the BBB Reliability Seal!

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