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What is Drop Shipping & How Does it Work?

What is Drop Shipping?

Drop shipping is an order fulfilment practice in which retailers source products directly from wholesalers, manufactures and or suppliers. Instead of buying stock and storing it, an item is only purchased after it’s been sold to an end consumer. Once sold, the supplier picks, packs and posts the item straight to consumer.

This type of business model has many benefits, but also some disadvantages, details of which can be found below.

How Does Drop Shipping Work?

Typically, products are pre-sold to consumers by a retailer and then sourced from a manufacturer or wholesaler. When a drop shipper sells an item, they order it from their supplier who picks, packages and ships the product directly to the end consumer.

Example:

  • Tom runs his own business selling DIY tools on eBay.
  • When a customer buys an item from Tom, they pay him directly.
  • Tom orders the item from his supplier for the lower price.
  • The supplier picks, packs and ships the item straight to Tom’s customer.

What are the Benefits of Drop Shipping?

Drop shipping has a vast range of benefits. Not only does it allow anyone to launch an e-commerce business without investing thousands of dollars on stock, but it’s also much less time consuming compared to the more traditional buy and resell model.

Learn more about the benefits of drop shipping here.

What are the Cons of Drop Shipping?

There’s no denying that drop shipping is a lucrative business model. However, it also has its share of disadvantages. Stock management is an issue for many due to having no control or insight into stock levels. Lack of control over product quality or dispatch times can also be a challenging aspect.

Learn more about the cons of drop shipping here.

Can Anyone Start a Drop Shipping Business?

Due to the low start-up costs and thanks to platforms like eBay, literally anyone can start a drop shipping business. The supplier handles most of the time consuming aspects of the business, therefore, even those with limited time can start and successfully maintain a drop ship business.

How do People Sell Drop Ship Products?

Many people go down the route of selling drop ship products on eBay and or Amazon. There are also thousands of people who use the model to sell through an e-commerce website. You’d be surprised as to how many well-known and established companies source products rather than physically stock them.

Whilst eBay and Amazon are great to launch a start-up business, building your own e-commerce website is the key to achieving long term success and sustainable income with drop shipping.

How Can I Get Started With Drop Shipping?

The first and most important step is to find a supplier. However, there are also some other essential steps you must take to successfully start and launch a drop shipping business. You can learn more about them here.

The Conclusion

In conclusion, drop shipping in no way offers a shortcut to success in e-commerce. It does however allow those with limited income or time to launch an e-commerce business quickly and without investing thousands on stock, storage space and retail space. It’s particularly suited to those who don’t have a lot of time to spare fulfilling orders.

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Wholesale Frog is a free to use online wholesale directory designed to connect retailers, eBay sellers and Amazon traders with legitimate manufacturers, wholesalers and drop shipping suppliers. Our mission is to become the go to place for B2B buyers who are looking for reputable suppliers to trade with. It's completely free for both buyers and suppliers to sign up, we have no membership fees. Access to our innovative directory, and huge network of trusted wholesale drop shipping companies is only a few clicks away.

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