Understanding the Drop Ship Product
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To begin you must know what is meant by drop ship product. This is a method used by many Internet sellers so they do not have to maintain an inventory of the items they sell. When you sell a product using this method, the order is placed. You enter the customer’s information into a drop ship account of your choice. The information goes to the manufacturer of the product who ships the product to the customer. You receive a bill for the merchandise – wholesale price of course – and the shipping. The price you have charged minus the wholesale price is your profit. Normally the customer pays shipping on the items they order so you will not be responsible for this charge.
There are many reasons for using this method rather than having an actual warehouse full of merchandise. Just remember trends change constantly and what is popular today may not be a best seller tomorrow.
How Drop Ship Products Help the Seller
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Using a drop ship product method of supplying your customers with the merchandise they order is beneficial in many ways. Here are a few of the reasons this is preferred by many rather than maintaining a warehouse of products:
- When starting your business you may not have the money to stock a lot of inventory.
- The frequency with which the popularity of an item changes may leave you with inventory that is no longer selling. Your money is tied up in this inventory and you cannot purchase the next ’hot item’ that people are seeking.
- Maintaining a warehouse and the people to ship the products is expensive, especially for a new business. If you have not begun to show a profit for your business yet, this is another expense that will cut into the time line for beginning to get a return on your invested money.
- Keeping track of inventory is another hassle when you are just beginning a business. The profits you expect to make are going to be reduced from the beginning when you have a lot of expense in maintaining your inventory.
- It will reduce the amount of stress you have when you do not have to worry whether this merchandise will sell or be left sitting in your warehouse.
Reducing Your Risk
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When you use this method to ship the product to your customers, you will not order the item until the customer has paid. The upfront cost does not have to be paid by you and then you wait to get reimbursed. This can be especially hard for a new business owner to handle with a limited amount of capital.
Another advantage of the drop ship business method is trying new products. If you would really like to see how well something might sell, you can add it to your online store. This eliminates the risks that you will purchase something that does not sell. For example, you see something that you think might be a popular item. So you put the item in your online store and wait to see if it catches the eye of the public. If so, when the orders start to line up, you order from the manufacturer and you have eliminated the possibility of being stuck with a product that does not appeal to consumers.
When you use the drop ship product method the profit you will generate is virtually risk free. This allows you to concentrate on the reason you started your business in the first place. To realize a profit is after all, the main reason you decided to get into business in the first place.
Time is Money
Look at the differences between using a drop ship method and a typical method of supplying your customers with orders:
Typical Method
The customers place an order. You will have to notify the warehouse. They must locate the product, box it for shipping, label it with the customer’s name and address, ship the order and keep track of what they have shipped by entering the order in the warehouse log. Who is paying for all this labor?
Drop Ship Method
Enter the information into your drop ship account. The manufacturer receives the order. They ship it to the customer. You receive a bill.
Time is money when it comes to an Internet business. Which method sounds like the least amount of work and investment? The drop ship affiliate commission method of course. So when you decide to venture into the world of Internet marketing, take a good look at the pros and cons of shipping methods. It should be quite clear which one is the least expensive and will save you time which after all is money.
