In simple terms, dropshipping is when a retailer offers for sale some item(s), which he doesn’t stock, but passes on the order to a manufacturer to fulfill and ship. In this way, a business owner can show items for sale but be spared the cost of manufacture, inventory and other costs of business such as shipping.
Not to be confused with affiliate marketing, where you represent a certain business, with dropshipping no one needs to know who makes the product and for all intents and purposes, it appears that the retailer stocks and ships the orders.
This has been done quite successfully for years by such big names like Sears and Wal-Mart. But now due to the Internet, more and more smaller home-based businesses are taking advantage of drop shipping.
For example, John Smith sells custom T-shirts. When you look at his catalog or website, you see a very nice selection of both readymade and custom printed Ts. A customer will choose and submit an order to John’s Custom Ts. John then forwards the new order to his dropshipper, who then fulfills the order and finally ships it to the original customer.
John never sees the actual T-shirt, never has it in inventory, doesn’t have to stock supplies, manufacture it, pack it or ship it. He just acts as the storefront and order taker. Of course, if there is any problem with the order, he is the one who needs to deal with it in some cases, depending on the dropshipping company.
For example, let’s say you want to sell a specialty muscle building supplement, but don’t have the facilities or financial means to build a business from scratch. Fortunately for you, there are manufacturers whose sole purpose is to custom blend and fill orders like this. In that case, it would be called private label dropshipping in that the manufacturer would take your custom request and then label it with your label and ship it in your name.
As you can see, there are many distinct advantages to using dropshipping. As a retailer, you only need to be looking to display the items attractively and be able to take orders efficiently. Your forte would be marketing and sales – getting consumers to see your offerings. There’s no hassles with hiring employees to maintain a large manufacturing concern.
The manufacturer, in turn, can do what he does best – and that is make the products for you and others like you. It’s smart business to specialize and do what you do best and delegate what parts of the sales process that you can’t or don’t want to do to others. There are many more advantages to all concerned.
Now more than ever, entrepreneurs are able to bring to the public just what it wants without the large investment and hassle of setting up an entire manufacturing facility and shipping department.