Drop Shipping - What it is and what it can do for your business
Author: Anthony Joh

Drop shipping is a term that is used in Logistics frequently. What does it mean and what is the purpose of drop shipping?

Drop shipping (also referred to as dropship) is a fulfillment service in supply chain management which allows individuals to sell items without physically possessing the item (ex. Amazon drop shipping). In simple terms, drop shipping lets you buy products from a wholesaler and ship the item directly to your customer without you physically having the product.

Drop shipping is beneficial for several reasons for sellers:

  • It allows individuals to sell items just like an actual store / regular business without having to constantly carrying the products
  • You do not need the products nor a storage space immediately which allows you to start with low capital
  • The risk involved when compared to starting a physical business is much lower and management process can be simplified through integrated fulfillment management services

The advantages for sellers are evident when using drop shipping but what about in the case of the supplier?

  • You are able to sell products in constant quantities to sellers all over the world
  • Drop shipping process can be planned with minimal work in your end using a dedicated 3PL drop shipping specialized logistics company –  you do not have to physically handle the shipping and receiving of the products, allowing you to focus on your business
  • The rate of margin will be steady at an even pace as you offer prices at a lower margin than the selling price to the sellers who are consistently looking for items on demand

On paper and through explanations, drop shipping sounds easy and hence, people search for the term Amazon drop shipping frequently. However, like any business, it is already a congested market and requires A LOT OF WORK in order for you to have profit.

Factors such as :

  • An appealing website that differentiates you from other drop shipping or regular market businesses
  • Ability to find products that the people want / need
  • Marking the prices accordingly so that the price point is reasonable for consumers while you are able to leave a margin when going against stores and other business owners
  • Managing your drop shipping in an efficient way through reliable drop shipping service companies

The biggest question you get when discussing these factors is regarding the drop shipping service companies. Business owners always ask for references and user experience when it comes to logistics companies who provide top notch drop shipping services.

Reliable drop shipping service plays a crucial role in determining the business success. Customer satisfaction plays a vital role when it comes to product sales. This can be broken down into more specific details:

  • Customers want to receive their items ASAP. Delivering your products in excellent condition at the fastest delivery time possible is a guaranteed win in customer satisfaction’s area
  • Returns happen no matter what. Even when the delivery time is prompt and the item was sent in perfect condition, customers may still want to change the products for various reasons. Understanding this consumer behavior and being proactive with the returns process with simple steps will make customers want to shop with you in the future again.
Dropp shipping will continue to play crucial role for many businesses even for years to come and logitics companies will continue to fill the need for drop shipping and order fulfillment for e-commerce businesses. 

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