Is Drop Shipping A Viable Business Model?
I know what you’re probably thinking.
“Drop shipping is a scam!”
“Drop shipping will get you into trouble!”
“Drop shipping takes forever!”
“You can’t make a profit with drop shipping!”
Okay, I get it. Those things are all true IF you’re not
careful. But if you ARE careful, drop shipping is actually
a very viable business model!
Sure, it can be tricky to find drop shippers that have
prices low enough to let you make a profit and are reliable
enough that you can really count on them.
But once you know the secrets, you can make a very good
income with it, and with a lot less hassle than you might
find operating a traditional store.
Over the next few days, we’re going to talk about some of
the problems you might face using drop shipping.
We’re also going to take a look at some of the best ways you can set up a profitable online store using drop shipping,
with very little upfront investment.
If you think it sounds too good to be true, don’t worry!
Drop shipping is even used by major companies that you
probably order from all the time!
Companies such as:
* Fingerhut
* Zappos (they started with solely drop shipping!)
* Amazon (yep, even Amazon does some drop shipping!)
* Sears
Still think it’s not a viable business model?
Benefits Of Drop Shipping
If you start your own online store with traditional methods,
you will have to spend a lot of money upfront on stock.
Then you will have to have a place to store all those products
until they sell. (And a garage isn’t usually big enough unless
you’re selling a VERY limited number of products!)
You’ll also have to deal with packaging and shipping all of
those products, and making sure you have plenty of inventory
for all the orders you might get so customers don’t get upset
that you’re out of stock.
It’s a HUGE amount of work, and it can become very frustrating
very quickly.
But drop shipping reduces or eliminates all of that!
With drop shipping, they take care of:
* Investing in the products
* Storing the products
* Packing the products
* Shipping the products
All you have to do is take the customer’s money, purchase the
products and send them straight to the customer, and handle any
customer support requests.
Sounds easy, right?
It is!
In many ways, drop shipping just makes sense for most startup
stores.
Of course, it’s not totally without problems. Tomorrow, we are
going to take a look at some common issues you might encounter,
and how to avoid them whenever possible.
Drop Shipping Drawbacks
Like any business model, drop shipping is not totally without its
share of problems.
The good thing is that most problems can be minimized or avoided, and
they are a lot less troublesome than the problems you might run into
if you’re using traditional ecommerce methods!
So let’s take a look at some of those potential problems, and how you
can minimize them.
1. Products Out Of Stock
It’s one thing for a product to go out of stock and for the customer to
be disappointed they can’t order it.
It’s something else entirely for a product to show as IN STOCK, when it
isn’t, and for the customer to order the product and THEN find out it
isn’t available.
You can use software to help minimize the likelihood of this, and we will
talk about that in another lesson.
2. Returns
Ah, returns.
They can be a real hassle, especially when the customer has received the
product they ordered and nothing is wrong with it.
There are two ways to deal with returns. You can either have a strict no
returns policy like Zulily, or you can just process the return.
You’re not really out anything as long as the customer sends the product
back. You can always send it out to the next person that orders it, or
return it to the company.
But you DO need to make sure to keep some capital on hand all the time
for returns so that you can send a replacement out to the customer as
soon as you receive the return.
You can also minimize returns by having proper sizing charts, making
sure your descriptions are accurate, etc.
Those are the two biggest problems you might encounter with drop
shipping, and they really aren’t that big of a deal if you handle them
correctly!
