Drop Shipping For Dummies

Chances are that when the average consumer needs or wants something, they visit a retail store, either online or off, and purchase what it is they desire without ever thinking about what we retail geeks call the “supply chain.” The consumer only cares that the store has what they need at the price they’re willing to pay

The retailer, however, must have an in-depth understanding of how the product being offered and sold comes to be available in her store in the first place. In a typical supply chain, there are four points of contact:

1. Manufacturing
2. Distribution
3. Retailing
4. Consumption

Sometimes, a retailer is able to go directly to the manufacturer and cut out the wholesale distributor. The only point in the chain at which a single item is purchased is at the last point of contact, which resides with the consumer. The distributor and retailer both tend to buy in bulk…unless of course the distributor offers drop shipping.

What is Drop Shipping?

In short, drop shipping is a supply chain management technique in which the retailer does not keep goods in stock, but instead transfers customer orders and shipment details to either the manufacturer or a wholesaler, who then ships the goods directly to the customer.

The big advantage of drop shipping should become clear at this point. Because the retailer never has to commit to a purchase until after they’ve already made a sale, there is very little risk for the retailer compared to the alternative of purchasing manufacturers items in bulk.

Drop shipping allows retailers to enter niche markets at a low cost, allows established retailers to test out new markets with little risk, and can even act as a back-up supply to the traditional supply chain management system.

In fact, drop shipping is so advantageous to online retailers that most big name retailers use it to fulfill on a majority of their online sales.

Drop Shipping: All Roses and No Thorns?

So drop shipping is great, right? Well, it all depends on your specific situation and what you’re trying to accomplish. Yes, drop shipping has many advantages, but it’s not all fun and games. As with all things in business, you must surrender some of the pros of the traditional supply chain when drop shipping.

To learn more about some of the drawbacks of drop shipping and get ideas on how to best deal with them, request your free copy of Drop Shipping For Dummies by leaving a comment on this blog entry. Be sure to enter your email address, though, in the field that asks for it. While no one but our Blog administrator will see it, we’ll need to contact you to get a hold of your mailing address for your very own complimentary copy of Drop Shipping For Dummies.

Edit 2/16/2010: We’ve been getting lots of questions from people about when they can expect their copy of Drop Shipping For Dummies. Here’s how it works.

We initiate contact with all those who leave a comment once a week on Friday. If you’ve left a comment by Thursday of the current week, you’ll be contacted on Friday of that week. Watch for an email from Doba asking for your shipping address. Any comments left on Friday through the next Thursday will be contacted the following Friday. Once we receive shipping information, those addresses are batched and shipment is made once per week.

Hope that helps. We have plenty of copies left, so keep the requests coming!