Drop & shop, or drop shipping as it is most commonly known, is a retail fulfillment strategy that does not require physical stock to be kept by retailers or eTailers. Rather than keeping products at a store, stores purchase products from a third party supplier when an order is made. The supplier then ships the product to the customer, and the shop owners does not handle the product at any point.
The main difference between drop & ship and standard retail models is that eTailers do not own stock. Inventory is instead ordered as needed from one or more wholesalers or manufacturers. This strategy, like many others, has its advantages and challenges. If you are thinking about becoming a drop ship supplier, or a drop ship business, you may be wondering how it works. For those who are aiming to sell US goods without being based in the US, the process can be even more confusing. Not having a US address is one of the biggest challenges for customers as well as businesses who in drop shipping. One of the simplest ways around this challenge is to invest in forwarding box in order to offer worldwide shipping.
How does drop shipping work, and what do you need to know about this approach if you are considering it for your eTail business? Keep reading to find out.
How Does Drop & Ship Work?
Before you drop & ship, it is a good idea to understand the benefits and challenges. The drop shipping model has a number of advantages, including the following:
- Lower initial entry cost. Unlike traditional retailing, which requires a large amount of stock to get started, you do not need any stock to start selling. You will only need to purchase products when they have been ordered by a customer at your store. With that said, the profit margins are not always huge with this business model.
- Wider choice of products. Because you do not need to pre-buy any items, you have a lot more choice when it comes to deciding which products to sell to customers. You can take your pick from a huge range of product categories, from clothing to gifts and unique finds.
- Reduced risk. As you will not be saddled with a huge inventory, there are fewer risks involved if you do not make many sales. This reduces the risk of opening an online store, making it a good option for those who want to test the waters before opening a traditional online store.
- Independent location. You do not need to have a physical store, or even be based in the same country. Instead, you simply need a computer and an internet connect to get started. This means that you can start your business from anywhere in the world.
- Highly scalable. Another benefit to not having to fulfill orders yourself is that it helps you grow your business without the worry of unwanted or outdated stock. Keep in mind however that one challenge to consider is not being able to fulfill orders. The best way to get around this is to keep more than one supplier on hand.
What happens if you are customer hoping to buy products from a drop shipper? You will need a forwarding box if you are based outside of the drop shipper's country for starters. Some of the below questions will give you more information on what to consider, whether you are a drop shipper or a customer using one.
Who pays shipping costs on orders?
Drop shipping suppliers generally pay for shipping, but they will often pass this cost on to the shop that placed the order. Customers will then also pay for this in the final cost for the item that they have purchased. This cost will vary depending on factors such as whether it is worldwide shipping or local shipping.
What is a freight forwarding company?
Many customers may use a forwarding to purchase items from the US. This enables them to get products shipped from suppliers that do not generally ship to their chosen destination. The most common form of forwarding is done through a US address or post box. The challenge with this however is that some drop shipping suppliers do not recognize the address, and the order is sometimes canceled automatically. There are a few ways that this can be navigated, luckily...
How do you drop ship to a freight forwarding address?
If you use a drop shipper or you are a customer purchasing from a drop shipper, you can use a trusted shipping partner such as eLogX, which gives you a US address that is authentic and reliable. This is the most effective way to get the products you need without any delays or issues.
To learn more about the solutions offered by eLogX for drop & ship or forwarding box options, simply contact us today.