What is Drop Shipping? Drop Shipping, sometimes spelled as dropshipping, is a highly innovative supply chain management or a retail fulfillment method in which the retailer does not keep a physical stock or inventory of products and goods being sold, rather transfers the purchase orders and shipment details to a manufacturer or wholesaler who does the delivery to the customer.
How Does a Drop Shipping Business Work? Say, you run a website, based in the Philippines, where you display and promote your products, and you have partner suppliers around the world. A customer orders a product and pays you at a retail price of $50 (PHP 2,500.00). After validating the purchase order, you send it to your supplier and pays the product at a wholesale price of $35 (PHP 1,750.00). Yes, you’ve just earned $15 (PHP 750.00)! Your supplier then will be the one to fulfill the purchase order, and hence process and deliver the product to the customer. That’s exactly how drop shipping works!
“Sa madaling salita, sa drop shipping, pwedeng-pwede kang magbenta online at offline ng kahit na anong produkto nang hindi pinoproblema ang mga tradisyunal na proseso gaya ng pag-iimbak (storing), pag-iimpake (packaging), pagpapadala (shipping), at higit sa lahat, ang malaking pamumuhunan (putting big money upfront) sa pagbili ng mga produckto nang wholesale para i-retail.”
How to Start Your Drop Shipping Business in the Philippines. As soon as you decide about the products to market and perform a competition research, you should find and partner with credible third-party product suppliers or manufacturers who will fulfill purchase orders.
After forging partnerships, you should then build online and offline platforms for business presence and all those product marketing, advertising, and promotions. Your online platforms may include Facebook pages, well-designed websites, and even blogs which integrate your online store, while your offline platforms may include direct product promotions to friends and relatives and some sort of printout promotions. You can even start an online store in just a few clicks with Shopify, an e-commerce platform.
Advantages and Disadvantages of a Drop Shipping Business. While dropshipping business poses several advantages over traditional retail including the ease and convenience of putting up an online store, hassle-free inventory and shipment, millions of available products to sell, and attractive profits, there are still disadvantages and potential issues that need to be addressed upon startup.
One of the biggest challenges confronting a dropshipping entrepreneur is to look for a reliable supplier or manufacturer that can guarantee a hundred percent fulfillment of customers’ purchase orders at par with their standards and expectations. In the same way, offering and selling products that are no longer available from the supplier may hurt customer service and credibility. Equally important, a drop shipping business requires technical skills such as promotional photo management and writing product descriptions and reviews.
As with any other business ideas, building a profitable dropshipping business takes not just your capital, business grit, and basic knowledge. It requires more of your long-term perspective and continuous learning process. As this one provides you with the fundamentals, you still need to do more research about drop shipping business!