(This tip is provided to you from the e-book, “5 Steps for a Successful E-Commerce Web Site,” available for download now.)
Ever wonder how some online retailers are able to offer so many diverse products on their sites? They must have a warehouse the size of Lake Michigan to store their stuff, right?
Well, not really. The e-commerce world has adopted the longstanding practice of what is called “drop shipping.” This means you sell stuff to customers from your Web site without having the items in your inventory. Or put another way: You virtually sell stuff that others have in their inventory.
Here’s an example: Let’s say you sell and ship pet supplies online and keep a healthy inventory of sparkly kitty collars, chew toys, and poodle sweaters on hand (meaning in your garage). Now you also sell cat carriers on your site, but your garage is only so big. So when people order these they’re shipped directly to the customer from a cat carrier distributor/wholesaler/manufacturer that has them in a warehouse five states away.
In this cross-selling arrangement, you make the sale and receive the money. Then you send the order plus wholesale and shipping costs to the wholesaler, who sends the item to the customer. The difference between the retail and wholesale cost is your profit.
Drop shipping can work for any size of business, but is nicely suited for small businesses that sell in small quantities and don’t want the hassle of buying and storing and shipping inventory. There are online services available to help you set up drop shipping arrangements with wholesalers, but do your research before you get involved because, as always, there are scam artists out there.
You can read more about drop shipping and get other e-commerce insights by downloading our free e-book: “5 Steps to a Successful E-Commerce Web Site.”
Are you already a successful drop shipper? Please, share your wisdom with the rest of us.
David Alexander