According to research, online retail store sold over $370 billion with drop shipping contributing 85.1 billion.
This number is expected to be much higher by the end of 2019, and whether you want to face it or not, drop shipping is the future of e-commerce.
How Drop shipping works
Customers care about the quality of a product, and it’s price and the reputation of the store they buy from. They don’t care about where the product is sourced or who fulfils shipping.
In drop shipping, a retailer acts as a link between the manufacturer and the customer, and he earns a commission for his effort. In simple terms:
- You identify a customer pain point
- You source for a high-quality product to solve the customer pain point
- Through your website, you advertise the product as your own and put a markup margin
- The customer buys the product and pays you
- You pay the manufacturer, and they ship the product to the customer
One of the greatest things about this business is that you don’t have inventory which saves you money in terms of storage, personnel, packaging and more.
Why drop shipping is the future of e-commerce
Traditional e-commerce stores require you to source products, ship them to your warehouse, package them and sell them. You need to order products in bulk which required a lot of money, time and resources.
With drop shipping, you do not worry about sourcing for products in large amounts. All you need to do is contact the wholesalers by e-mail and notify them that their products are now available in your store.
With a conventional e-commerce store, you need large storage facilities especially if you are dealing with large items. In drop shipping, you are saved the hustle that comes with maintaining a storage facility because the products stay with the manufacturer.
Automated order fulfilment
You don’t need to spend time fulfilling orders or following up on which order has not been met. You can hire a virtual assistant to take care of this or use automated drop shipping software.
Professional photography and product catalogue provided
With a traditional e-commerce store, you need to take high-quality professional photos of the product. In drop shipping, you can import the images from the manufacturer with a click of a button.
Easy to scale your business
With all these steps taken care of for you, your primary goal will be to scale your business through sourcing for new products and marketing them to increase sales. All the money you could have used to pay for a warehouse, shoot photos, pay personnel can be used to grow the business.
Drop shipping provides startups and entrepreneurs with an opportunity to favourably compete with medium and large companies in the online space. E-commerce becomes a fair playground, and more physical store are expected to adopt this model in the future if they want to compete favourably.