What is Drop Shipping Anyway?

Anyone who considers opening a retail store, especially one that operates entirely online, wants to find the best way to move the product to his or her customers as quickly as possible. In many cases, one possible option is drop shipping. Drop shipping is a term thrown around in the world of retailing and wholesaling, but what exactly does it mean, anyway? Once you understand the concept, you can determine if this is the right option for your particular situation.

What is Drop Shipping?

Drop shipping is a method of sales and shipping where you do not keep products in stock, but instead you partner with a wholesaler who ships the items for you. Some companies will even ship with your own packaging, so the customer never realizes the product came from an outside firm.

The benefits are numerous, but there are drawbacks too. Since you don’t keep product in stock, your overhead is lower. However, your product cost will likely be higher, since you’re paying someone else to handle the shipping. Plus, you are not the one working with the product hands on, so you don’t know if your customer is getting the level of service they deserve. It’s important to weigh the benefits and drawbacks and see if it will pay off for you.

As you can see, drop shipping has its place, but it isn’t always the right solution. For instance, if you sell unique products, you must find your own shipping solution. Using purchasing agents in USA or freight shipping to Latin America are two additional options. Depending on the size of your packages and the quantity you ship, one of these could be a better solution than standard shipping. Whether drop shipping is an option or isn’t, do your research and make certain you choose wisely—it can help you reduce your bottom line and improve your customer service.