Establishing your first online store can be daunting. A common question that one may ask themselves is whether to drop ship. Drop shipping means you deal directly with wholesalers who take care of the shipping process for you. Many online store owners don’t necessarily like to handle stock so drop shipping goods provides an alternative. In a nutshell you sell the products online while the drop shippers fulfill the order. They simply hold the stock while you sell it. The difference between what you sell the product for and what you pay the drop shipper is essentially your gross margin or profit. Upon receipt of the order online, you simply pay the drop shipper who then sends the product directly to your customer. The key advantage here is you don’t need to bulk order or hold stock on site. This saves both your money being tied up in stock and your premises filled with unsold stock.
Product sourcing can be done in a number of ways. You can simply try your luck online or go to wholesale and drop shipping directories such as Worldwide Brands and Doba. There are some downsides in using drop shippers for you online business. The obvious downside is that you are reliant on somebody else to deliver the goods. Essentially you do not have total control over your business from end to end. You need to be conscious that sometimes drop shippers may run out of stock and that you don’t sell products that aren’t available. Another downside is the margin you make on each sale. The reality is that margins are generally lower with drop shippers as opposed to using wholesalers where you bulk order. There are other alternatives to product sourcing such as selling on consignment or the traditional way of sourcing stock directly from wholesalers and holding stock on hand. Ultimately it’s preferred to use multiple product sourcing avenues to give your online business the best opportunity to succeed.