If you want to start a small business, there are many potential business models. Unfortunately, too many of these businesses ideas are either not proven or require far more work than most of us are willing to do. The exception to this is drop-shipping, a legitimate business model with nearly unlimited upsides. Here are three reasons why drop-shipping is a great business model.
Come to Market Quickly
One of the major perks of drop-shipping is that it allows you to come to market quickly. Simply set up a drop-shipping ecommerce website while the merchants filling the order handle all of the back-end work. You don’t have to cultivate suppliers, market a new product or worry about filling orders fast enough. In fact, you could start selling as soon as the site is up and your suppliers ship as soon as they receive the orders. All you have to do is promote the site to generate more sales. If you want to test new products, you can list it on the site and see if it sells well without having to bring in the inventory. You won’t have to commit your own money to the expanded product selection.
Provide a Broad Product Offering
Drop shipping allows you to offer a far wider inventory online than you could possibly have in stock in a retail store. If you have a drop-shipping arrangement with several retailers or suppliers, you can present whatever they have in stock. A side benefit of having the wide inventory selection is that you’ll attract visitors searching for a wide array of items, and they can do a comparison shop on your page, maximizing the odds of completing a sale.
If you have an online storefront selling your own product, drop-shipping is an excellent way to expand your offering. Then you’re selling a much wider variety of items than what you just have in stock, and many coming to buy the drop-shipper’s items will buy your products as well. You do have to be careful not to confuse orders, such as forwarding orders for your inventory to the third-party supplier.
Low Cost Entry
You’ll be able to invest your time in promoting the site and generating sales instead of receiving, storing, packing, and shipping products. You certainly don’t have to pour money into inventory, warehouse space and shipping supplies so that you can fulfill orders. If the site does well, you may invest money in upgrading it, but you don’t have to pay employees to fulfill the increased volume of orders. You do have to be careful about product profit margins. You don’t want to charge so little for an item that there’s nothing left for you after the supplier’s costs, website maintenance fees, and other expenses are paid. Don’t forget things like payment card processing, pay per click advertising, and the potential cost of product returns.
A side benefit of drop-shipping is that you can work from anywhere, including home. Whether you want to run a business while traveling the world or simply want to make money as a retailer without the investment of time and money into a retail storefront is your decision.
Drop-shipping is an excellent way to set up a real online business with minimal work on your part. It is a proven business model that can generate extra income for anyone, and many success stories are earning a good living via drop-shipping.