If you are looking to start an e-commerce business, looking for a drop in reliable shipping companies would be your primary concern.
In order to find the right company, we must understand the process of this and the risks involved. In this article, you will learn the fundamentals of it, as it is very important for any e-commerce business along with the benefits and risks involved in it.
In this way, not only will this process be understood, but you will be able to maximize the benefits involved and minimize the risks.
It is a process in which the retailer’s orders are transferred from the customer and the shipping details either to the wholesaler or a drop shipping company, which then sends the good directly to the customer. Retailers do not keep the goods in common and the difference between the retail and wholesale prices is a benefit to traders; however, in some cases, retailers earn an agreed percentage of commission sales, paid by the wholesaler.
Some retailers offer only a catalog or website of their customers to inspect an item similar to those they can buy. However, in some cases, retailers may keep screen elements to show up in the store to give the customer confidence about the product being purchased.
In order to conceal this fact that the product is delivered through wholesalers and to maintain the secrecy of the wholesale source, some retailers use drop ship merchandise using’private label shipping’ or’blind shipping’.
Now let’s talk about some of the benefits and risks involved:
As it would be nothing more than a warehouse to collect, pack and ship the product, duplication of effort is eliminated. This approach can minimize the total shipping and inventory management cost that is subsequently reduced to the customer price.
It also helps eliminate initial inventory and a positive cash flow cycle. Now you must be wondering how a positive cash flow cycle can occur here. It may happen that the seller is paid when the purchase is made by credit card or credit terms and there is a time frame in which the seller has the customer’s money but has not yet paid the shipping company the drop to deliver the goods.
Since there are some benefits, some risks involved in sending out as well. For example, it has been featured prominently in home-based business scams or internet-based scams.
They usually promote it as a lucrative work of home opportunity, easy opportunity to make money or make money online opportunity to sell a directory of companies from which you can order loose shipping of products to be delivered to customers.
In most cases, these companies are mere intermediaries between retail wholesalers and wholesalers, with no product of their own to sell. These intermediaries often charge higher prices that leave low profits for retailers.
Re-ordering is another big risk involved in the business of drop shipping. It can take place when a product is sold and the seller makes a demand for transportation with a wholesaler.
Returning orders can come with a long wait to deliver a product as wholesalers wait for new products to be manufactured or get it in one go, which can leave customers dissatisfied for retailers. It’s the business owner’s job to keep track of the quantities that wholesalers have available, but reputable wholesalers always keep track of inventory retailers.
If you are going to keep the above points in mind, you will be able to find a reliable drop shipping company for your e-commerce business.