Drop Ship is a well-known supply chain management technique today. Gone are the days when you necessarily have to stock items to sell; instead drop ship offers the third party supplier’s inventory directly for sale. As a business model, drop ship outsources the fulfillment of customer orders to whoever supplies the product and accounts for shipping right to customers.
Drop shipping has its own good and bad, read our blog Drop shipping: An emerging trend and new way to sell online, but undoubtedly retailers have enough reasons to consider drop shipping to succeed online and we drill down to understand the edge retailers earn using drop ship to increase sales and profits.
Focus on core business area
Retailers often find it difficult to maintain broad range of products. Imagine a small or medium size online retailer who has to manage the huge inventory and even do the shipping right, anything u miss on will create unsatisfied customers. Instead, if the retailer has drop shipping arrangements in place with professionals in that field, that retailer might offer dozens of different options or be able to focus on the core area of business.
Less investment, less risk
While doing business, you definitely look for options to reduce investment. And what if you get the quality of service but with minimum investment? Drop shipping allows you to maintain the service level but without any upfront investment, i.e. a retailer can significantly reduce the investment in products and even cut the risk of carrying the inventory in-house.
Saves time and money
The retailer does not have to stack, store, pull, pack, receive or ship products in a drop shipping layout. All these tasks are time consuming and one need resources to accomplish them. With drop shipping arrangement, retailers no longer need to take the responsibility of all these tasks once their product is sold online, instead they end up saving time and money.
Less time to market
Drop shipping eliminates the delay of products being shipped from the supplier/manufacturer to the merchant; instead the moment the product is bought online, it is being shipped directly to the customer’s address. Less the turnaround time, more pleased are your customers, which in turn increase your sales.