Some info to share with you.
I bet most of us knew about this especially to those who are in e-commerce/online business. Here are some info I want to share with you my fellow friends.
What is drop shipping?
Drop shipping is a fulfillment model that allows you to buy products individually from a wholesaler and ship them directly to your customer.
Instead of purchasing a large amount of inventory, we simply partner with a drop shipping supplier and list their merchandise for sale. Then, once we receive an order you forward it to the supplier for fulfillment. The supplier will ship the product directly from their warehouse to our customer, and charge us only for the price of the shipped item.
Is drop shipping a profitable business model?
Like all businesses, success and profitability rely on a number of variables. But when done correctly, it’s possible to create highly profitable online businesses with drop shipping. Drop shipping isn’t a magic formula – and real success takes significant work and time – but it’s a viable online business model with very low risk. Drop shipping is currently the model I use to start my own online store – anithkamila and allowing me to quit my corporate job.
What are the benefits of drop shipping?
The drop shipping model has a number of advantages:
Lower Capital Requirement: With drop shipping, we don’t need to invest thousands of dollars in inventory. Instead, we only purchase a product when you have an existing order to fill.
Wider Product Selection: When we don’t have to pre-purchase all the items you sell, we can offer a significantly larger number of products to your customers.
Reduced Risk: Without thousands invested in inventory, the risk involved with starting an online store is dramatically reduced. If things don’t work out, we aren’t stuck with thousands in inventory you have to sell at a loss.
Location Independence: Because we don’t have to worry about fulfillment or running a warehouse, it’s possible to run a drop shipping business from anywhere with a laptop and an internet connection.
Highly Scalable: Because we don’t need to manually fulfill each order, it’s relatively easy to scale a drop shipping business.
How much can I make with drop shipping?
Again, like all businesses, profits and success range widely based on a number of factors – most notably, the commitment and dedication of the business owner and the niche selected. But with a long-term commitment, hard work and the right approach it’s possible to create a drop shipping business that provides a six-figure income.
A business of this scale will take time to build – likely years – but it’s definitely possible. And once a drop shipping businesses is up-and-running, it’s fairly straightforward to automate and/or outsource most of the day-to-day aspects of the business.
What kind of profit margins can I expect with drop shipping?
Profit margins will vary greatly depending on the products you sell. For expensive electronics, margins are thin and will likely be in the 5% to 10% range. But for low-priced fabrics, clothes, accessories, margins will often be in the 100% range.
Our margins will also depend heavily on our ability to offer value to our customer, which allows us to charge a premium price over our competitors.
Where do people sell drop shipped products?
People sell drop shipped products just about everywhere! Many sales on eBay and Amazon are fulfilled through drop shippers, as are items on thousands of e-Commerce sites, especially smaller ones.
And even the big names utilize drop shipping to expand their product catalog and offerings. It’s likely that large companies like Sears and Home Depot utilize the drop shipping model for some of their less popular items. This allows them to offer a broad selection while limiting the inventory they have to maintain.
While it’s possible to sell drop shipped items in a number of ways, creating our own e-Commerce site offers the best chance of building a scalable, profitable and successful drop shipping business in the long run.
Hope this help!