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There’s a product distribution trend known as dropshipping that offers online businesses such as blog-based website a quick, easy and low-risk way to start selling products online. This article delves into this trend to consider the benefits of this model and help you work out if drop shipping could be the answer you’ve been looking for.
THE TRADITIONAL MODEL
Traditionally, if you were to want to sell products on your website, then there are two main options, the first option is that you would need to create your own products, or you could buy products in bulk, from a wholesaler or manufacturer, which you must then store until someone buys them.
The first option of creating your own products can be a very arduous and time-consuming process, that is easy to get wrong, on the basis of misalignment with market needs or poor branding decisions; essentially, you could invest a lot of time and money into the research and development phase or create a product that nobody subsequently wants. The second option, of buying items in bulk at wholesale, perhaps on a site like alibaba.com, but this can be an expensive solution that comes with a huge risk of investing in stock that you cannot subsequently sell.
The main challenge therefore, is that traditionally, you would need to invest a substantial amount of money in stock which eliminates most people from having the opportunity to sell physical products online, which is why so many people have opted to sell ebooks or online courses as they haven’t needed to invest in holding physical stock.
There is a better way. There’s a new solution known as “drop shipping” that is taking the industry by storm, whereby almost anyone can offer a plethora of products without having much upfront cost and only spending money when they are making money – meaning huge benefits from a cash flow perspective – and a much more open market that is accessible for all.
WHAT IS DROPSHIPPING?
Drop shipping is a method of order fulfillment where a manufacturer and/or distributor ships a product to the end customer on behalf of the retailer. To offer an example, let’s say you advertise a weight loss supplement on your blog, what would happen is your visitor clicks on the product and carries out the transaction with your website – but then, an automated dropship website handles the back end fulfillment; meaning an email is sent to the weight loss supplement manufacturer providing your customer’s details so that they can fulfill the order.
This means you have no stock, warehousing, manufacturing facilities, label printing, postage and packaging etc. It is the most simple and streamlined way you can possibly sell products online. Drop shipping minimizes risk and cost whilst significantly reducing the time required to fulfill an order – meaning, in this example, as a blog owner, you can focus on content generation and marketing efforts.
10 BENEFITS OF DROP SHIPPING
- Money doesn’t need to be invested in purchasing an abundance of stock, warehouse facilities, and so on, meaning that if your digital business doesn’t work out, the money you’ll have lost is limited to aspects such as web design, hosting, and marketing fees.
- You don’t need to worry about excess inventory that is surplus to requirements (e.g. due to a change in tastes or trends).
- Lower volume products that are more niche items can be offered alongside bestsellers, meaning you can provide a wider range of products that are more tailored to specific niche interest groups.
- Substantially lower costs.
- New products are less expensive to launch as there is no hefty investment to make before they can be sold. The business is cash-flow positive as you only really ‘spend’ money when you ‘make’ money… and the expenditure is directly coming out of the revenue generated by the transaction.
- Significantly less time investment
- The number of items that get damaged during shipment is often lower as a mathematical result of the fact the item doesn’t have to keep changing hands.
- Hugely convenient, low effort, and low hassle.
- All the hassle of tasks such as packing products and going to the post office is taken care of for you.
- You can add new products to your offering very quickly, and similarly, you can remove products that aren’t selling without incurring any physical loss.
- There’s no need for storage. This is a particular benefit if the items you’re selling are bulky in size. All you need to manage is the website where the items will be sold; there’s no need to worry about the perishability of products (i.e. items going off) and no need to pay for storage of your inventory.
In summary, drop shipping offers some incredible benefits that centre around the feeling of freedom, low financial risk, convenience, low hassle, and less headaches. It’s a fantastic alternative for most website owners who are considering promoting products on their platform.
HOW DROP SHIPPING WORKS
In a nutshell, you find a wholesaler or distributor that offers a drop shipping service. You then handle the marketing side of things (e.g. you set up a virtual store on Amazon, Shopify, or your own website platform), you write captivating content, engage in social media and email marketing, and then reach out to your readers with some great products offers.
You handle the marketing side of things, and that’s where your responsibility ends. You process the payment, but when it comes to actually facilitating the end-customer getting the final product, you are very “hands off” because it is all taken care of for you by the drop shipping service provided by the manufacturer.
They receive your customer’s order, then go to their warehouse, pick the item, pack it, and send it on your behalf (they can even do this in your own branding – something known as white-label drop shipping.
With such simplicity and cash flow benefit to your business, you can imagine this service is going to come at a cost, but it’s perhaps less than you might expect. The “handling fee” is usually about $2 – $5. However, that’s on top of the wholesale price for the product itself and the cost of shipping. This means there are much thinner margins (particularly with low value items) but it’s still very easy to remain profitable, particularly when you consider the cash flow benefits, and the fact that you now have an automated system you can leverage; meaning you can sell 10 products a day or 10,000 a day; and your time investment remains the same.
Drop shipping is therefore a fantastic way to create passive income; which is essentially income that you don’t have to exchange your time for money – instead, you leverage an automated system that does the work for you… your job in this process is simply to connect your audience with interesting products.