There is often a lot of confusion concerning what drop shipping is. Drop shipping is a method of product fulfillment and is not to be confused with “drop kicking” as this is something entirely different. All kidding aside, drop shipping enables those without a physical storefront or warehouse space to sell products without having to maintain any inventory. This means that individuals, such as ourselves, can set up a website, offer quality products and compete with the “big boys” in the field of ecommerce.
In the traditional model of product fulfillment a customer orders a product and the commercial retailer would then pull the product from their own stock and ship the item to their customer. This method requires that the commercial retailer maintains a large level of stock on hand for future orders.
This is not the case with drop shipping. In this model the customer orders the product and the retailer would collect payment and place the order with the drop ship vendor. The drop shipper would then ship the product to the customer on behalf of the retailer. This whole process is transparent to the customer as the drop shipper will typically place your company’s address on the shipping label and invoice. This allows individuals and smaller companies the ability to compete on a larger scale.
Drop shipping a product may cost more, but in the long run the cost is offset by the retailer not having to pay any of the costs associated with maintaining a stock level. These costs may include not only the building lease, but also electricity and cooling. In addition, the retailer is free from the cost and labor involved with the shipping of products.