subject: Drop Shipping And Virtual Inventories [print this page] It seems as if nearly everything in the world can be done virtually. When you sit down in front of your computer you can create a whole other life for yourself complete with a house, relationships, and even pets.
Well, with drop shipping, you can even manage your own virtual retail store. Luckily, this virtual warehouse isn't just a world inside a computer, but a way to let your business grow without building a warehouse in your backyard!
Drop Shipping Defined
For starters, a simple definition is that it is a way to send merchandise directly from wholesale suppliers to customers. This doesn't change the fact that you as the retailer continue to make money on the difference in price between retail and wholesale. The next question you may have at this point is about the pros and cons.
What's in It for Me?
The pros of drop shipping are essentially saving time, storage space, and allowing for expansion of your business. As you may already have encountered, running a retail business, online or otherwise, involves creating and maintaining inventory from which to take orders and sell products.
Drop shipping eliminates this need for inventory. Rather than keep a stock of merchandise from which to take orders, you can simply take the order, pass it along to the wholesale retailer, and let them take care of the rest. This clearly streamlines the delivery process. Instead of you receiving a shipment from the retailer and reshipping the merchandise to customers, it goes directly from the wholesaler to the consumer.
Another plus involves the location of your customers. As much as we would like to be in multiple places at once, the truth of it is that you most likely run your business from one location! This means that you're shipping from that one location as well.
Depending where your customers are, this can result in lots of shipping fees and long wait times for your customers. With drop shipping, products can be sent from the warehouse closest to the customer, thereby cutting wait times and increasing customer confidence.
Possible disadvantages result from the same advantage of not having to maintain your own inventory. If a wholesale supplier has in fact run out of an item, back ordering can occur and a customer may have to wait for an extended period of time to receive their order. This problem, however, can be solved by simply keeping tabs on what the wholesale retailer has available.
Overall, drop shipping provides limitless inventory and expansion options. It can even create, if you will, a virtual warehouse for you!
by: Stu Wiseman
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