| Starting an online store, or any business venture, can | | | | inventory just the initial purchase might run something |
| be a scary prospect - especially if you need to come | | | | like $50,000 (consider all of the sizes and styles you |
| up with a large amount of money for that initial | | | | would need to stock). And that number does not even |
| inventory purchase. Drop shipping removes the axiety | | | | consider the warehouse space and labor involved in |
| and the big inventory bill. So, what is drop shipping and | | | | picking and packing. So, you would be $50,000 in the |
| how does it work? | | | | red before your first order. |
| Product wholesalers usually only deal with retailers - | | | | If the same company uses drop shipping, they would |
| shipping them products in bulk quantities. However, | | | | establish an account with the drop shipper. The drop |
| many wholesalers will now ship directly to the end | | | | shipper might even supply a data feed and stock |
| customer - this is drop shipping. | | | | photos - greatly reducing the amount of time required |
| What this means for online retailers is that they do not | | | | for site development. Here's the great part - the |
| need to keep any inventory in stock. When a | | | | retailer would not purchase even a single shoe. Once |
| customer places an order, the retailer forwards the | | | | an order comes in the details are sent on to the drop |
| order to the wholesaler. The wholesaler ships directly | | | | shipper, who fulfills the order. The retailer gets paid and |
| to the customer. A good drop shipper will ship with a | | | | does not have to pay the wholesaler until the end of |
| generic return address label or even the retailers label | | | | the month (using a credit card or net credit terms). |
| and inserts. Some drop shippers will even handle | | | | So, the company that chose to drop ship saved at |
| returns! | | | | least $50,000 (probably alot more) just in up front |
| Let's consider an example. Suppose you want to start | | | | costs. The savings keep piling up each month as the |
| a site that sells women's shoes. If you had to stock | | | | company does not have to pay for space and labor. |