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Drop Shipping – A New Way to Make Profits With Drop Ship Suppliers

by Wanda Rich
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Drop shipping is an efficient type of online retailing business in which the seller accepts orders from clients but does not retain goods on hand. The drop shipper, on the other hand, takes delivery of the purchased items directly to the customer. Instead of keeping stocks on hand, the retailer forms a partnership with a drop ship supplier. In the USA, this arrangement has been viewed with some sympathy since the laws regulating the distribution of alcohol have not recognized the right of wholesalers to sell directly to the consumer. Thus, a certain amount of state supervision of these companies’ activities has been witnessed. There are instances of liquor stores having been shut down for not taking delivery of alcohol directly from the distributor.

In Canada, a few states still allow retailers to drop ship but the restrictions seem minimal. A wholesaler needs to be registered under the province’s liquor control commission to be able to sell to the public. Furthermore, there is also a duty to notify the province if the wholesaler fails to deliver certain products on the specified date. This makes the arrangement rather inefficient since the drop shipping supplier must retain inventory as well as make the deliveries for when the required date arrives.

In case of an ecommerce site, there is no physical inventory of products ordered. Instead, the website maker keeps track of the inventory of the suppliers. For example, a new product may be introduced and its sales could go up quickly. The website maker could then dispatch the product to the suppliers who would have it on hand. The site maker also makes deliveries to the customers who purchased the item from the drop shipping supplier.

A question thus arises as to what is drop shipping to the consumer? The retailer makes purchases from a supplier who ships products directly to the customers without keeping stocks on hand. He does not maintain inventories either. Thus, the products the retailer sells are not in the possession of him. The retailer thus uses drop shipping to make good profits.

The main benefit of this business is that you do not have to maintain inventories. If you want to change the stock of your goods, you can just order different products from your drop shipping business supplier. You do not have to invest in new inventory since the products are delivered directly to your customers. It is just important to make sure that your drop shipping business has the different products you want to sell.

Drop shipping does not solve the problem of maintaining inventories. There is still the need for you to maintain inventories of products and keep track of inventory to make sure that the manufacturer gets paid. The manufacturer also takes care of payment processing, fulfillment and returns. Some manufacturers may charge a fee for this service. Some others offer credit systems for payment processing and inventory maintenance.

Your profit margin will also be affected by the amount of orders that you receive. You have to calculate how many of each product that you can get rid of at one time. This will help you maximize your margins. With the right inventory management, you will be able to maximize the margins on all products that you sell. If you are using an established and quality control-based system, you can be assured that you will enjoy all these benefits as your drop ship supplier has no problems providing you with quality control monitoring.

Most manufacturers offer customization options for some of their products. Drop ship suppliers who also offer customization are most often the ones who specialize in such services. You can get your products personalized according to the specifications of your customers. If you have a specialized website and have access to a reliable manufacturer, you can offer customized service for a fee that is not much higher than the cost of shipment.