have previously blogged about the pros
and cons of drop shipping,
but what else do you know about this hot topic? We thought we'd
provide a more detailed post detailing the numbers behind drop
shipping, some of the most common questions, and whether it's a good
tool for your business...
Retail e-commerce is a $220 billion dollar market in the U.S. alone
and is growing by nearly 17% a year. (eCommerce
Drop Shipping Standards)
number only looks set to rise with U.S. Online Retail Sales expected
to Hit $370 Billion by 2017! There's no denying that the ecommerce
market is huge.
readily available to now help people set up their online store, it
makes sense that people are looking for ways to improve on their
those who didn't catch the previous post, drop shipping basically
means that when a customer places an order from you, the supplier
will ship the product directly to the customer – so you don't have
means that you don't have to worry about finding a warehouse for your
stock, spending hours of your time dedicated to shipping products and
you are free to run your store anywhere you like.
else uses it?
22-33% of Internet retailers have adopted drop shipping as their
primary method of order fulfillment. (E-DSS.org)
be surprised how many stores actually use this method to help shift
their stock. Zappos
began as a drop shipping company, Amazon and Sears both use drop
shipping and Wayfair.com
has built their entire business around this very method!
In 2012 drop shipping accounted for 34% of products sold in 2011 by
e-commerce giant, Amazon.com. (Forester
$14.2 billion dollars of drop shipped orders from a single
e-retailer! Now if Amazon can make it work for them, then there's
definitely the opportunity for your online store to do the same.
I profit from drop shipping?
you can. If used correctly, drop shipping can be a great help to the
success of your business. As you will be cutting shipping costs
completely, there is potential to make a profit here.
will save money because:
won't have your money tied up in stock
won't have to pay for storage and associated bills of storing
won't need to pay for a warehouse, equipment or staff
won't need to buy in bulk – so you won't have unwanted stock to
do I find a supplier I can trust?
of online sellers find that establishing a drop ship supplier or
wholesaler relationship is the #1 roadblock to starting an online
it comes to drop shipping it's OK to be cautious, but as with any
business tool, you need to do plenty of research. If you pride
yourself on excellent customer service, then your supplier has to be
somebody who you can trust and shares your values. If they are
willing to offer seamless communication with you then there's no
reason why you can't form a great partnership. Check out
as you can find a whole directory of wholesalers, along with
does it benefit the manufacturer?
average profit of a manufacturer who drop ships is 18.33% higher than
a manufacturer who uses traditional channels. (The
Journal of the Operational Research Society)
Due to storage
limitations, when a retailer has to buy in bulk they can normally
only hold around 13% of what a supplier would like to sell –
meaning lower profits for the supplier. With drop shipping, the
constraints are lifted so the retailer can buy whenever they get an
order, and the supplier can make more money in the long run.
I have to use drop shipping all year round?
In the 2013 festive period, 18 percent of retailers increased their
inventory with the help of drop shipping, due to an increase in
The truth is, you don't
always have to use drop shipping if you don't want to. Anyone with
good business sense will know that you can't become too complacent.
If something isn't working then change it. If an opportunity comes
along – take it. Drop shipping might not always be something that
will work for your online store all the time, but during busy festive
periods – it certainly can help you sell more stock.
in your hands
The choice is yours to
decide, but if you are new to ecommerce then drop shipping is a
convenient and easy way for you to get started with your online store
success. Are you considering it? Do you use it currently? We'd love
to hear what you think in the comments below!
speaking of ecommerce success – don't forget to give
us a call
if you ever need help setting up your awesome online store.
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