Plan ahead when using a Drop Shipper

By: Robert Cyr

Drop shipping does work, the concept and the process is not new. There are thousands of companies who openly advertise, "We will drop ship to your customer". Drop shipping has offered a sense of hope for many individuals who are are interested starting a business, but do not have a large amount of cash to invest.

Wikipedia defines drop shipping as - "a supply chain management technique in which the retailer does not keep goods in stock, but instead transfers customer orders and shipment details to wholesalers, who then ship the goods directly to the customer. The retailers make their profit on the difference between the wholesale and retail price."

Lets take an honest look into using this business model:

Advantages:

• No inventory to stock


• Ability to instantly have thousands of products to sell


• Total control over who you use as a supplier


• Product shipping/order fulfillment handled by supplying company


• You can run your business from home


• Drop shippers will typically allow you to use their image photos to advertise on your website or ebay auctions
  

Disadvantages:

• Unless you actually have the product in hand, you do not know condition or quality of any one item being shipped out


• Merchandise returns? Most, if not all drop shippers will not accept purchase returns from your customers. How then do you offer customer satisfaction?


• Sometimes orders placed with a supplier will be "out of stock"


• Product shipping/order fulfillment handled by supplying company. This can be a disadvantage as some drop shippers might process your orders too slow.

If you decide to use a drop shipper for order fulfillment the best way to succeed is to start with a business plan. Lets look at it this way..How many times have you found yourself using Mapquest or Yahoo maps on line for directions?

If you have a place where you want to go (destination) and you have never been there before... you would follow step-by-step instructions to get there, right? If your business idea is a destination for you into uncharted territory please follow a map (business plan) or you will inevitably become lost along the way.

Develop a strategy that will answer the disadvantages of dropshipping should they occur in your business. Be ready and prepared for the unexpected and your business will prosper. Consider the following suggestions when drop shipping:

• Use multiple companies to drop ship your products; why rely upon (or be at the mercy of) one?
• Follow up with your customers...Did they receive the merchandise in a timely manor? Are they happy with the purchase? Would they order again?
• After reviewing the performance of a drop shipper (order fulfillment) discontinue those that under perform
• Use drop shipping as a starting point for your business, work up to actually stocking the product you are selling. When you inventory the product you are in total control of the selling process from marketing to shipping

What is your experience with drop shipping....success or?


This post brought to you by:

The Closeout Industry - A wealth of information centered around wholesale closeout merchandise. Author and consultant, Robert Cyr has educated thousands of entrepreneurs offering advice relating to sourcing name brand merchandise far below wholesale pricing.