What Is Dropshipping? How Does It Work?

Today, there are more than 100,000 online retailers distributing projects across the United States. In some cases, these types of businesses fulfill orders by buying products from a wholesaler. Companies that rely on wholesalers continuously look for ways to make the process as efficient as possible, saving them time and their customers’ money. One beneficial strategy is using dropshipping as an alternative to traditional fulfillment methods.

What is Dropshipping?

Dropshipping is a fulfillment method used when stores don’t keep products in stock. Alternatively, when a customer buys a product, the business purchases it from a wholesaler and has it shipped directly to the customer. Some businesses also choose to utilize a dropshipping company that can store and ship products on their behalf. In both scenarios, the business selling the products never sees or touches the items.

Benefits of Dropshipping

If you’re trying to figure out if dropshipping is for you – check out these benefits for your business.

  1. Increase product offerings.
    Depending on the size of the warehouse, a business may be limited to the number of products offered if they handle storage and shipping on site. Through dropshipping, businesses can increase the number and types of products they sell without having to worry about running out of space.
  2. Advertise new products quickly.
    When retailers decide to offer new products under a traditional fulfillment method, they often have to wait weeks for the inventory to arrive. Having to wait prevents companies from getting to the market quickly, ultimately putting you behind the competition. With dropshipping, you can begin advertising products immediately.
  3. Test new products without a big investment.
    Updating your inventory with new and fresh products is an essential part of staying relevant in today’s busy culture. The downfall of offering new products is the initial investment required to stock them, and not knowing how the products will perform. With dropshipping businesses can test products with no upfront costs, preventing them from investing too much too early.
  4. Reduce overhead.
    Stocking products and inventory is a major component of a business’s overhead. On top of having a large amount of money invested in the inventory, there are additional expenses with storing, insuring, and managing to consider.
  5. Increase efficiency.
    For smaller business and startups, the owner is often the same person responsible for stocking, packing, and shipping orders. Being so wrapped up in the daily activities of running a business prevents owners from being able to market, build relationships, and grow their business.
  6. Generate more sales.
    Through dropshipping, increasing your revenue over time is a possibility with more effective time management, leading to larger profits.

Econo-Courier is courier and shipping company offering a variety of shipping and warehousing services. Contact us today to learn how we can help you with dropshipping!