What is Dropshipping?

Drop shipping is very beneficial to smaller retail shops, internet-only storefronts and those who primarily use catalogs for sales. Customers of these outlets don’t always expect to walk out with their purchases, so a slight delay between ordering and drop shipping is not a drawback. A representative item may be displayed on the store’s shelves or pictured in its catalog, but the actual product purchased may be sitting in a factory’s warehouse 3000 miles away.

One of the biggest problems drop shipping addresses for retailers is inventory control. In a traditional retail store setting, products are ordered in bulk from the manufacturer and must be stored in a secure area until displayed. This means maintaining a proper storage area, hiring employees to handle the stock and investing in security measures to prevent theft. With drop shipping, the retailer does not keep a large inventory on the premises. More space can be devoted to displays, and fewer employees need to be hired to handle shipping, receiving, inventory and security.

Drop shipping is a supply chain management technique in which the retailer does not keep goods in stock, but instead transfers customer orders and shipment details to either the manufacturer or a wholesaler, who then ships the goods directly to the customer. As in all retail businesses, the retailers make their profit on the difference between the wholesale and retail price.

Two main benefits of drop shipping are – no upfront inventory to purchase and a positive cash flow cycle. A positive cash flow cycle occurs because the seller is paid when the purchase is made. The seller usually pays the wholesaler using a credit card or credit terms. Therefore, there is a period of time in which the seller has the customer’s money, but has not yet paid the wholesaler.

Other benefits of drop shipping include:

* Eliminates duplication of effort as only one warehouse will pick, pack and ship the product thereby reducing costs in the supply chain.
* Reduces total inventory management and shipping costs which can be passed on to the customer by the retailer. [6]

How Drop Shipping Works

1.) You open an Internet Store, with a shopping cart and the ability to accept credit cards.

2.) You find a distributor who is willing to DROP SHIP the products you want to sell. The best place on the Internet for this is www.WorldwideBrands.com. This is our website, the home of OneSource, recognized as the best source for legitimate Wholesale Suppliers on the Internet.

3.) You establish an account as a retailer with the Drop Ship Wholesale Supplier.

4.) You receive images and descriptions of the products you want to sell from the Drop Shipper and post them on your Internet Store.

5.) A customer surfs into your Internet Store, and falls in love with a product that you have priced at, say, $80. They purchase the item with their credit card. Your Store charges their credit card $80 plus your shipping fee.

6.) You turn around and email the order to your Drop Shipper, along with the customer’s name and address.

7.) The Drop Shipper sends the product directly to your customer, with YOUR Store’s name on the package.

8.) The Drop Shipper charges you the wholesale price of, say, $45.00, plus shipping.

9.) Your customer gets a cool product from your store shipped to their door, and they tell all their friends about you, and you make even more money.

There you have it. You just made a $35.00 profit on one item. You didn’t have to buy a whole bunch of the product and keep it in your warehouse, hoping you would sell it. You didn’t have to pay to have it shipped to you, and then pay to ship it to your customer. All you did was send an email to your Drop Ship Wholesale Supplier.

That’s the drop shipping process in a nutshell!