Dropship software is software that enables drop shipping to happen efficiently. Drop shipping is generally an order fulfilment strategy, which the retailer does not hold the products in an inventory but relies on manufacturers or wholesale suppliers to ship orders direct to the customers. This strategy has several advantages that make it great and effective for online sellers/businesses.
A customer places on order for a drop shipped item online, the retailer receives this order and manages payment for the order, and then automatically or manually gets in touch with the wholesaler or manufacturer, then issuing a purchase order for the product and issuing instructions for shipping direct to the customer. The wholesaler or manufacturer ships the product, and the retailer earns a % profit.
There are at least seven good advantages here that almost any ecommerce retailer should consider drop shipping.
Advantages of drop shipping
It’s not that difficult to find trending articles about running a business from your mobile device or smartphone, whilst sipping a Cocktail on a remote beach in the West Indies. There are plenty of stories about people quitting their high-flying jobs in favor of running a successful drop ship e-commerce business and becoming their own boss, these are not uncommon at all.
So here are the seven key advantages of a Drop shipping e-commerce business:
- Increase your cash flow:Because you don’t stock the product, you don’t need to pay for it until it has sold (and always after you have been paid for it yourself).
- Scalability:The ability to Test products and add new and updates quickly without having to order in bulk and having something fail (which will tie up valuable time and indeed capital expenditure).
- Increase lifetime value of customers:The ability to add new and expanded product on the fly and constantly, which in turn will keep your existing customers engaged and returning to see what new and exciting items you have acquired.
- Low starting cost: You don’t need a huge early investment, as you have no need to buy wholesale or cover the cost of your own products through manufacturing.
- Enable expansion into new markets: It’s always difficult getting items across international borders, and can be expensive and very challenging, but if you contact and create working partnerships with good located suppliers, you can at best access the same or similar product range and you are able to ship them quickly, allowing you to test the market and measure if a given product is worth importing or investing in
- Reduce costs:There is a cost associated, every time you touch a product in the supply chain, Port Transport, Ocean freight services, , Courier services and of course warehouse employees will all get added into the Cost of the products Sold. Often, you will find that a good % of your products offered would net a business a lot higher profit margin if it was drop shipped.
- Almost unlimited inventory:Combat inventory distortion to help retailers and suppliers e.g. the 780-billion-dollar over-stock clearances problem and of course out-of-stock shelves. By utilising the inventory at a higher stage of the supply chain, theoretically you can have access to almost unlimited inventory.