Could Drop Shipping Work for Your Business?

Tips on how to make drop shipping work for your global business. As more eCommerce takes products abroad, solutions are sought in how to minimise overheads and bypass the expensive exporting process. One way to ensure fulfilment is drop shipping, but there are cons as well as pros.

The internet has allowed eTailers big and small to expand globally but this isn’t as easy as it seems. Taking a site to a new country requires investment, time and sometimes a release of control.

There are few international suppliers that ship directly from the UK as exporting laws, prices and slow delivery times make it a costly and frustrating process. Some set up warehouses in the new country along with local bank accounts to ensure smooth payments. In almost all cases a third party must become involved, whether this is a delivery firm, an international consultant or local supplier.

Drop shipping can expedite the process of selling abroad, it allows you to have a hands off approach as your supplier delivers directly to the customer. Obviously, this cuts costs and time along with other benefits such as:

1. A Bigger Inventory

You can offer every product your drop shipper supplies to your customers online without worrying about over ordering stock. This in turn reduces risk of overspending. Remember to keep a close eye on your suppliers inventory as you need to know when your supplier is out of stock, as this could irritate customers if you get it wrong.

2. Tiny Overheads

With drop shipping you only buy what your customer orders. With this in mind almost anyone with an internet connection could set up a global business. This also gives you freedom of location. You can run your business from the Maldives as long as the broadband is fast.

This all sounds too good to be true, if it’s that easy why isn’t everyone offering products abroad? What’s in it for the drop shipper? Couldn’t they just sell direct?

Points to Consider

Although it seems like a logistics dream there are many points to consider. It’s important to weight these up when considering if drop shipping is for you.

Extra Expense

Drop shipping doesn’t come cheap. Of course you can still make a profit but it will not be as large as if you were fulfilling orders yourself. You need to assess the savings you make on packaging, delivery and storage against the extra cost to see if it’s viable.

Customer Fulfillment

One of the major drawbacks of drop shipping is that once an order has been placed, you as a business lose control yet you are still expected to meet and exceed customer expectations. If a product is out of stock, arrives late or damaged, you are responsible for ensuring customer satisfaction.

The Risk

When choosing drop shipping for your business, you do open your company up to risk. As mentioned above, you relinquish control of the delivery. Over 25% of customers are unlikely to return to a store if the product they receive is damaged or broken.

On top of this, an out of stock product can put many customers off, so how do you eliminate these problems?

This is a risk you take with drop shipping and with removing the personalised experience. On top of this many drop shippers use their own packaging, which again removes your business personality. For extra fees you can supply them with packaging to use.

How to Get it Right

The key to benefiting from drop shipping is to find a supplier that’s credible and trustworthy. There are many touting for business however some have risky reputations so research is always advised.

Amazon are an example of how to fulfil customer’s needs with drop shipping. They are so adept at it that many customers don’t realise an intermediary is present. They’ve done this through integrating their own packaging and building great relationships with suppliers.

This model has been so successful that now they’re becoming a tangible retailer with warehouses and collection points and lockers across the world.

Have a Strategy

It’s best not to bury your head in the sand with drop shipping. Preparation is the key to making it work. You should prepare for the worst case scenario. For example, have a strategy to deploy should a product arrive damaged or late. Keep communication channels open at all times between the delivery company and your customers. Usually, customers are extremely forgiving as long as they’re kept in the loop, it’s when they’re left wondering that negative reviews start cropping up.

It’s completely up to you whether drop shipping will work for your business. There are many pros and many cons and it depends on your own business model, and the sacrifices you’re willing to take with customer satisfaction as to whether it will work for you.