5 Benefits of Dropshipping for Your Business
March 26, 2020
What are the benefits of dropshipping for your business?
- Increase your customers
- Low-risk investments
- More cash flow
- Lower costs on order fulfillment
If you own a business with a dedicated delivery service, a typical logistics environment involves warehouses, parcels, packaging, couriers, and other delivery services. However, concurrent with advancements in technology, more non-traditional forms of logistics practices are being employed daily. One such practice is dropshipping. The benefits of dropshipping cannot be underestimated. This is a kind of retail arrangement wherein your online retail store, for example, does not house stocks of a particular product.
In a nutshell, dropshipping entails a retailer forming a partnership with a dropship supplier which is responsible for manufacturing and storing the products in order to fulfill a product delivery. The supplier then directly ships the product to the customer.
Continue reading to learn more about the benefits of dropshipping for your business.
Increase your customers
Since dropshipping is typically practiced in online retail situations, it assumes that there is an absence of a physical store in the typical brick and mortar structure. As such, one of the benefits of incorporating dropshipping is that it increases your customers.
Having no physical store allows you to form collaborations and partnerships with wholesale customers which can display their products on your online store. The variety of products will subsequently attract more potential customers who may want to visit your online store.
As you’re beginning to set up your online retail store, you have many considerations with regard to the accessibility of your online interface. Apart from this, you won’t really have many costs to consider.
For example, businesses that rely on brick and mortar stores need to go through many legal channels and approvals in order to start up their business. They would first have to secure a loan from a bank or money lender. Once they’ve gotten through these obstacles, they would have to ensure they’re earning enough profit so their store won’t close down. The undesirable alternative would leave them out-of-pocket because of the money they have invested in their business.
Dropshipping typically erases these problems as it is a low-risk investment without requiring much capital to begin with. You wouldn’t have to pay rent if your store is located within a building or a major retail chain. Because you’re not keeping stocks of the products, there are also fewer chances of them depreciating in value or spoiling if they’re perishable items.
More cash flow
Keeping an inventory is typically a costly endeavor. In traditional warehouse practices, costs are incurred in almost every level of warehouse management. For example, simply procuring a particular product from a supplier can already cost you money, especially if the supplier is internationally-based. You will have to shoulder the necessary excise fees and whatnot.
The absence of a warehouse in dropshipping operations allows you to save up on these costs, enabling you to generate positive cash flow. In line with partnering with wholesale sellers, you will also have the opportunity to gain a wider array of clients and customers who are looking to buy wholesale.
Consistently practicing appropriate dropshipping practices builds your reputation and subsequently increases your profit-generation options.
Lower costs on order fulfillment
The aim of dropshipping is to deliver the product to the designated customer on time and in tip-top condition. This entails that every stage of the procurement, packaging, and delivery process has been meticulously accounted for.
Without dropshipping, these assurances can be particularly costly. You can’t really organize your warehouse efficiently if you’re storing too many products. You would need services from a manual pool of labor that you would have to pay for. Apart from this, you would also need to adopt a dedicated tracking system which also adds another burden to your costs. This is all without considering the costs of hiring a third-party carrier to deliver these products.
Dropshipping allows you to bypass most of these costs on order fulfillment and allows you to mainly focus on getting the products to their final points of distribution. Your dropship supplier will hold all other third-party responsibilities.
Finally, another reason which makes dropshipping advantageous for your online business, is that it allows you room for more flexible options. Partnering with a dropship supplier would lead to positive outcomes for your product variation, quality of service, as well as customer satisfaction.
The goal of your business is to satisfactorily serve as many different types of clients as best as you can. Let’s say for example a large-scale customer places a bulk order of electric vacuum cleaners on your site. You will simply find a dropship supplier who is able to deliver on this type of order.
Dropshipping opens up your online business to many possibilities. You won’t necessarily have to fulfill bulk order obligations all the time in much the same way that you won’t always handle singular orders. Furthermore, dropshipping allows you to easily secure collaborations with suppliers of various items, making for greater product flexibility.
The lack of a physical store is what typically makes dropshipping a lower-cost endeavor in logistics operations. Without having to worry about packaging, labeling, and warehouse managing costs, you’re able to focus on the more important aspects of your business such as delivering the products to their respective customers.
The guide above has hopefully encouraged you to consider the benefits of dropshipping. While it can be considered as a non-traditional way of handling your delivery services, it does present you with cost-efficient solutions.