Drop shipping is the business practice where a merchant purchases inventory from a manufacturer to fulfill orders. Using this process, goods are shipped directly to the customer without going through normal distribution channels. Check out some benefits of drop shipping to discover why anyone would want to do this.

1. Less Investment – If your inventory is coming from another source, you don’t have to spend money on initial inventory, a warehouse for inventory, or a shipping center.

2. Less Ongoing Cost – You won’t have to worry about the ongoing cost of inventory, nor will have encounter losses/stocking costs (due to ordering too much of the wrong products).

3. Easy Entry – When you don’t have to wait on the time to build an inventory, you can start an ecommerce business and begin selling on day one.

4. Time for Other Things – Since you don’t have to invest time into inventory building and maintenance, you can focus on other important tasks such as customer service and marketing.

5. Product Variety – When you purchase or manufacture your own product, you have to be mindful of how large your product line is. With drop shipping, you can offer a much larger variety to your customers.

6. Conduct Business Anywhere – With no shipping hub or inventory management, you can run your business anywhere that you have a computer, phone, and connectivity.

7. Business Flexibility – You can run an entire business off this model and only sell the items you drop ship. However, you can also use this to complement a business line that you already carry. For instance, if you make homemade pillow covers, you can drop ship the pillow forms. ;)  

Beyond the Benefits of Drop Shipping

If you decide to go with a drop shipping business model, take the time for due diligence to avoid problems. Have a relationship with your manufacturer so you can quickly call if there’s a product question or problem. Make sure that your manufacturer keeps a sufficient inventory (and find out if there are guarantees or limits), and know the typical turnaround time on orders. Make sure you understand your costs, including shipping. Research the manufacturer to find out if errors and delays are frequent (missing items, incorrect items, poor packaging, etc.) It goes without saying that you should test the product first to make sure it’s the quality that you expect.

As a final note, an emerging trend in the drop shipping business is private label drop shipping. This is where a manufacturer produces a custom item for a retailer and drop ships it with a return address and invoice customized to your business. This seamless transaction is yet another addition to the great benefits of drop shipping.