Smart Online Business: Drop Shipping and Wholesale Product Sourcing

In today’s economy, everyone is looking for ways to save a dollar.  eCommerce online businesses are no exception.  While online businesses require very little overhead and are considered low risk, there are still many ways to reduce waste, decrease cost and increase return on each sale.   To do so, online businesses should consider drop shipping many of their items for sale through wholesalers.

What is drop shipping?  

With drop shipping, online businesses no longer maintain stock of the goods they sell.   Instead, the online business transfers a customer’s purchase order to a wholesaler or a relationship they have built with someone who does maintain inventory and stock.  The wholesaler then ships the product from their warehouse directly to the customer.

What are the benefits of drop shipping?

Drop shipping allows the online business to eliminate the retention, maintenance, and management of inventory by putting those responsibilities on the wholesaler.  As a result, the online business reduces overhead and other costs associated with maintaining and shipping goods.  For example, space rented to house stock is no longer necessary, which directly translates to huge savings.  

In addition to saving money on overhead, drop shipping allows the online business to compete with other online businesses like Amazon and brick and mortar stores like Target without sacrificing product quality or customer satisfaction.  Finally, the mom and pop store gains the freedom to focus its efforts on its online presence thus competing with the big chains.

How to find wholesalers who perform drop shipping?  

Wholesale product sourcing is made easy by the technology age.  Through a general Internet search, a number of wholesalers can be found by brand, service, location, or company name.   When selecting a wholesaler, use common sense and do your homework as you would when making any business decision.  There a many great wholesalers with drop shipping capabilities, but beware of middlemen charging sign-up fees, withholding contact information, and quoting rates that are too good to be true.  After some research and upon choosing a wholesaler, pallets of wholesale products are immediately available to the online business.   The closer you can get to the original manufacturer or wholesaler of that product, the larger you stand to gain by selling whole merchandise online at retail cost.

Having a Great Selection of Products
Shoppers are constantly looking for that unique product and they go online because they know they can easily do comparison shopping in no time. When establishing relationships with wholesale vendors, get to know them and possibly gain access to more exclusive content. By loading a lot of product on a niche store such as an online store that only sells plush animals, you become the one stop website for all their comparison shopping needs.  They will no longer need to compare between websites.  

Tips with Drop Shipping
Drop shipping is an ideal scenario where you don’t have to keep your own inventory and gain profit from selling a manufacturer’s products online. There are some pitfalls you do want to look out for and be aware of.  When drop shipping you want to keep in constant contact with the manufacturer to make sure that products still online are available and have no been discontinued.  Just because you are not keeping inventory does not mean that there is not an actual inventory to be maintained.  You don’t want a scenario where you sell a product and it turns out that they no longer carry that product.

With wholesale product sourcing and drop shipping, online business profit margins increase while a steady, reliable source of inventory is only a click away.