Who should or shouldn't Drop Ship??/ and how to work here...????????

The concept of drop shipping to my mind is really very beneficial to the re-seller and buyer, but not really of much benefit to a manufacturer or supplier.

From a re-sellers point of view I guess drop shipping really is the ideal model. It means that you do not need to buy a product until after you have sold it. It means that you don't have to spend money on inventory nor a place to store the stock. It means that you don't need to spend money or time packing and sending products. Basically it means that you sell product and let someone else do all of the work!

The downside to dropshipping of course is all of the above also, as you are basically relying upon someone else to do all of those things right. If they don't then you lose your customers.

Generally speaking manufacturers in China make their money selling large quantities of a product at low prices and hold very little, if any, inventory. I assume that the same is true for manufacturers throughout the region. So I really doubt that any legitimate manufacturer would embrace a drop shipping plan.

Perhaps you could find some trading companies that would be willing to hold stock if they knew that you could sell the inventory in a short period of time, but you would have to accept that this comes at a cost and therefore the price you pay for the product would be higher than what you could buy it for if you went direct to the manufacturer. You also have the same problems of reliability, delivery times etc.

So in answer to your question who should drop ship, well to my mind it would be anyone who holds stock and is willing and able to invest the time and effort that it takes to process orders for one or two pieces of product and send these out. I really think that the further the final customer is away from the dropshipper the less sense it all makes.

Dropshipping is a good model no doubt about it, but in the context of manufacturers in foreign countries I remain unconvinced that many suppliers would embrace the model and that is profitable and/or advisable to bank on maunfacturers shipping product direct to your customers.

Quoting from [shailesh_aquerious]:


Who should or shouldn't Drop Ship??/ and how to work here...????????

Let’s first talk about the true benefit of drop shipping. The main reason small businesses can get into the drop shipping business is there usually are no upfront inventory costs to buy which in turn results in a positive cash flow. This positive cash flow occurs because the seller more often then not is paid when the purchase is made. The seller than turns around and pays the manufacturer, distributor or wholesaler using a credit card or if negotiated properly gets credit terms where goods are not paid for in 30-60 days. So the seller has the customer’s money, but does not pay for the goods immediately and this is commonly referred to as “cash float”.  Not owning the inventory gives the drop shipper the ability to sell thousands of products, whereas in traditional brick and mortar retailing, these sellers are limited to the inventory they actually purchase.


But as in any business, risks are involved in drop shipping. The biggest risk is the seller sells a product from their online store that the supplier has sold out. Now you need to deal with customer service issues and as anyone doing business on the Internet knows, online customers don’t want excuses, they only want their products. So your supplier now makes you look inept as a drop shipper. Another risk is you are relying on a third party shipper to deliver the goods to the customer. Shippers loose goods and they damage goods. Customers don’t care who the shippers are, because as far as they are concerned, the drop shipper is responsible. Now you have another customer service nightmare, figuring out where the goods have actually ended up. A third risk is the quality of the merchandise is not what the customer perceived it would be and now you are stuck with taking back a return. Where, then does the return end up? Your spare bedroom or the vendor who shipped it originally?