Drop Shippers: The Good, The Bad, and The Truth

Written by Stu Lisonbee Thursday, 21 July 2011 06:40

When it comes to retailing online, there are a litany of methods that you could consider when it comes to product sourcing -- not the least of which is using a wholesale drop shipper. And just what is drop shipping? Simply put, it's when a wholesaler agrees to ship items directly to a customer on a retailer's behalf.

When it comes to retailing online, there are a litany of methods that you could consider when it comes to product sourcing -- not the least of which is using a wholesale drop shipper. And just what is drop shipping? Simply put, it's when a wholesaler agrees to ship items directly to a customer on a retailer's behalf.

When it comes to drop shipping, it most definitely will have plenty of advantages. But it will also have its mix of problems. As the saying goes, "Every ship of opportunity brings with it plenty of rats." Drop shipping's opportunities can seem great thanks to the idea of having someone else burden the costs of warehousing products, but it has its "rats" as well.

Another great advantage is that retailers don't pay for any product until it has already sold and the customer has paid. All the retailer has to do is pass the order on to the drop shipper, use a portion of the money they've just been paid with from the customer to pay the wholesaler, and voila! The product is on its way to the end customer, all packaging and shipping being handled by the drop ship wholesaler.

It's a wonderful relationship for all parties involved. The drop shipper gets customers that they don't have to market for, the reseller doesn't have to handle any inventory, and the purchaser gets their products, regardless of where it comes from. However, a reseller has some considerations when they work with drop shippers as well.

Depending on your particular circumstances and methodology for doing business the drawbacks can, on occasion, outweigh the virtues. Aside from having limited control over packaging and shipping, pricing will be higher for drop shipped items. Additionally, you are often at the mercy of your supplier when it comes to policies regarding returns, warranties, items that arrive damaged, etc.

Not all drop ship suppliers are created equal. Just like retailers can vary in their level of customer satisfaction, wholesalers will do the same. And just like it is with retailers, satisfaction level will often be influenced by how friendly their policies are and how well they treat their retailers. Shop around. It may take a little time for you to find the perfect drop ship supplier that suits your needs just right, but the search will be worth it.

All of this aside, if you're looking to get your feet wet with online retailing then drop shipping can be a great way to go. The initial costs are very nominal, and you won't have to deal with any storage issues as well. This can be a very profitable area for both the retailer and the drop shipper. Everybody wins when this type of business is done right.