Drop shipping is not a new concept in the retail sector. Many people when hearing the term ‘dropship’ are more than a little baffled by its meaning.
Drop shipping is essentially a supply chain management technique in which the retailer does not keep goods in stock, but instead transfers customer orders and shipment details to either the manufacturer or a wholesaler, who then ships the goods directly to the customer. As in all retail businesses, the retailers make their profit on the difference between the wholesale and retail price. Large retail and mail order companies have been using this technique for years in order to ‘fulfil’ their customers orders, whilst maintaining minimal stock levels.
Since the birth of the internet and the e-commerce opportunities, the high street and catalogue companies are now not the only people able to take advantage of the methods involved in using wholesalers to ‘fulfil’ orders.
Some retailers may keep “show” items on display in stores, so that customers can inspect an item similar to those that they can purchase. Other retailers may provide only a catalogue or website.
A customized packing slip may also be included by the wholesaler, indicating the retailer’s company name, logo, and/or contact information.
Two main benefits of drop shipping are – no upfront inventory to purchase and a positive cash flow cycle.
Other benefits of drop shipping include:
Eliminates duplication of effort as only one warehouse will pick, pack and ship the product thereby reducing costs in the supply chain.
Reduces total inventory management and shipping costs which can be passed on to the customer by the retailer.
As in any business, some risks are involved in drop shipping. For example, back ordering may occur when a seller places a shipment request with a wholesaler, but the product is sold out.
Drop shipping has also featured prominently in some Internet-based home business scams. Scam artists will promote drop shipping as a lucrative “work from home opportunity.” The victim who buys into this scam will be sold a list of businesses from which drop-shipment orders can be placed.
For this reason we have set up a working arrangement between ourselves at Rainbow Studios and several renowned dropshippers with good reputations and levels of service to enable our customers to be confident in their choices of supplier.
If you are alternatively holding your own stock we have a range of services available to you too. From product photography services to suppliers for giftwrapping and packaging, we have 2 new services available thus far and are looking to increase the services we can bring to you as time progresses.
