For the Shop Front Retailer with inventory management and warehousing /storage and delivery facilities there are obvious benefits of expanding their business and signing up with suppliers or agencies that handle multiple suppliers, however generally this will be under term agreements and legally binding contracts to protect the merchant and the supplier.
Let’s say you have decided that you want to expand your retail portfolio or start your home based business by selling products online. Drop Shipping can provide a positive cash flow where you do not need to carry inventory and is shipped via a 3rd party.
Questions to consider:
- Where will you source your products from and what is your budget?
- Can you purchase single items or do you have to buy bulk items in advance?
- Do you have storage facilities?
- Are you responsible for delivery of the product?
- Are the international freight costs covered by the Supplier?
- How are the products packaged and labelled?
- If it is a large order from China, will Customs seize the order? – Actually yes, it is a possibility and the options would be to split your orders into several smaller packages, this again would add to your shipping costs
- Who pays for customer duties? It is your responsibility as the buyer for any custom duty fees that may be charged depending on each country Custom Policy.
Facts
Generally most of the drop shipping suppliers and fulfilment services are based in USA or UK, supporting major brand retail stores; however trends emerging from China which offer drop shipping services to both companies and individuals make this more competitive to compete with same-country distributors.
Benefit
The key to establishing yourself in this market is to ensure that you have researched your products, formed a good relationship with your supplier and your products can be delivered direct to your customer’s door.
Like any business, this will take time and you will need to ensure that your foundation is rock solid and manage the online site for customer retention and growth – if you have this in control then you can look forward to developing a sustainable business.
Risks to consider
Be warned there are growing ‘home based business’ opportunities that are described as a lucrative business with little or no time and money required….. Generally these ‘opportunities’ are set up with high margins with little profit and may cost you a regular service fee.
An example of a company that went upside down was Ozdirect. “The ACCC alleged that Ozdirect accepted payment for goods when the company had “reasonable grounds” to know it could not supply them “in a reasonable time.” Sourced from http://www.news.com.au/business/ozdirect-ordered-to-curb-conduct/story-e6frfm1i-1225755504071#ixzz1KbCvcw00
Also consider that if you intend to sell your products globally that you should be informed of import policy as you are responsible for assuring that the product can be lawfully imported to the destination country.
Lastly if you do decide that drop shipping is right for you be sure to research your product and conversion strength, the last thing you want is a product that attracts dust not profit.
Here is a list of some of the Drop Shipping agencies that you can sign up to – Disclaimer here - these are not affiliate links nor do we endorse or subscribe to advising their rank and they are in no particular order, in fact we would love to hear from you??
http://www.dropshipaccess.com/
