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The concept of drop shipping has now picked up momentum reaching the
midst of growth curve, fuelled by internet commerce.
and retailers are seeking new ways to enrich their business. Due to cost
constraints, they prefer to do business with little or no investments. Drop
shipping is a process, wherein goods can be shipped directly from the
manufacturer to the consumer.
shipping is a supply chain management technique where the retailer does not
keep goods in stock. The customers orders are transferred to the manufacturer
of wholesaler, and goods are shipped from them directly to the customer. In
this process, the distributor takes care of the shipping part on behalf of the
retailer. The retailer dos not order stock in bulk. Instead, the stock remains
with the distributor, and when a sale is made, the merchandise is packed and
sent directly to the customer with the retailers label on the box. A sample
item of merchandise will be displayed on the store shelf, or pictured in the
catalog, or website, while the actual product purchased will be in the
warehouse of the manufacturer many miles away.
traditional retailing, retailers order products in bulk from the manufacturer,
and keep them in the store until it is displayed. This requires maintaining a
proper storage area, hiring staff to handle the stock, and investing in
security measures to avoid the products being stolen. With drop shipping, the
retailer does not have to keep any inventory, or get involved in packaging, and
paperwork. He accepts payment for an order, and the customer gets the product
from the manufacturers. The role of the retailer is that of a middleman;
interacting between the manufacturer, and the customer. The difference in the
wholesale and retail price is the retailers profit margin.
retail space: The space primarily
allotted to storing can be used for displaying. Even small shops can offer
exotic products without cost concerns, and expensive storage facilities. Shipping
process would be handled by professionals and more retail space would be
available. Less number of employees will be needed for handling the stock.
risk: By adopting this process,
retailers can minimize their risk, as less or no investments are required for warehouses,
and inventory. There is always a risk of trends going obsolete. So retailers
have the pressure of selling the merchandise before the fad fades out. But with
drop shipping, risk of merchandise going out-of-fashion is not there, as the
retailer does not keep possession of the product. Instead he enjoys the
opportunity of selling the latest items that are more in demand thereby
acquiring good profit margins.
More options: Retailers
can keep more options and sell a wide assortment of products. They can sell any
product available with their drop ship wholesaler, as they do not have to buy
and keep the stock. This helps them to sell even expensive items, which they
would not opt to, if they have to buy and stock the product.
for small retailers: This process
is beneficial to all retailers and more beneficial for small retailers, online
stores, and for those retailers who depend mainly on catalogs for their sales. There
may be a small time gap between the ordering and drop shipping time, but the
customers do not mind it, as they do not expect to walk out with their
process has manifold benefits. Many manufacturers also opt for drop shipping
as; the retailer becomes an additional salesman for his product. They enjoy
benefits of reduced shipping
costs, and more sales exposure to their products. Here,
the manufacturer can use inexpensive shipping methods,and
local delivery companies. As manufacturers have more space
than retailers generally; the products would also remain safe.
in this world is an unmixed blessing. Drop shipping, despite of all positive
points, do have a few hitches. Some manufacturers protest against drop
shipping. Main shipping and receiving systems may experience bottle-necks as
time would be spent in processing and shipping individual orders. Some
manufacturers only deal with bulk orders from retailers, which make it
difficult for small retailers to custom orders, only for a few items. Under
these circumstances, the customer will have to bare the shipping costs, and
also the retail price.
shipping helps the retailer to enhance his business to new heights. Only,
concern might be taken to select a right drop shipper.
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