Are considering expanding your product line or are trying to launch a new online business?
Do you want to guarantee your shoppers that you’ll always have your product in stock? And where will you warehouse all your stock?
You will need to invest in new or more inventory. However, securing stock can take a lot of resources including money, time and decent management.
Dropshipping allows Australian ecommerce owners to sell products online without having to buy products until they’re sold. The manufacturer creates the merchandise and ships it to the client on your behalf.
In this post, we’ll introduce you to drop shipping in Australia. Our quick guide to drop shipping shows you what drop shipping is and how online merchants like you can use it to help further your ecommerce website.
What is Drop Shipping?
Drop shipping is a fulfilment process in which merchants like ecommerce store owners buy goods and stock from a manufacturer who ships them directly to your customer who bought them from you, the online retailer.
Let’s discuss who is involved in the drop shipping process.
Wholesaler, Vendor or Manufacturer: Manufacturers create your products that they may then sell to wholesalers. Wholesalers buy products in bulk from manufacturers and then increase the price to sell to merchants in smaller quantities.
Merchants or Retailers: Merchants sell the products directly to customers at a higher price that they then retail through their online ecommerce store.
How online stores can use drop shipping
Drop shipping is a retail fulfilment method where a store, especially an ecommerce store doesn’t keep the products it sells in stock. Rather, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer. As a result, the merchant never sees, warehouses, stocks or handles the product.
Merchants can use drop shipping as an efficient fulfilment process when selling to their customers. Let’s take a look at how it works:
- Merchants establish business relationships with vendors that carry merchandise they want to sell.
- If you are selling in smaller quantities, merchants buy from wholesalers on an as-need basis.
- Large merchants can buy directly from manufacturers at a lower price if they meet the minimum purchase requirements.
- Online store owners offer these products either on their website or other online marketplaces, like eBay.
- When a client places an order, the vendor is notified of the purchase and charges you the wholesale price of the product
- The wholesaler is then responsible for shipping the product to your customer.
One of the best parts of this process is that the vendor is completely invisible to your customers. The product appears to be shipped from you, the merchant and your branded online store.
The biggest distinction between dropshipping and the normal retail model is that the selling merchant does not stock or own the inventory. Instead, the merchandiser purchases inventory from a third party – typically a wholesaler or manufacturer – to fulfil orders.
Is dropshipping worth it?
Dropshipping isn’t a perfect, stress-free way to build a successful business. The model has some definite benefits however it also comes with a variety of inherent complexities and issues that you will need to be ready to address.
The good news is that with some careful planning and consideration, most of these problems can be resolved and need not prevent you from building a thriving, profitable drop shipping business.
What to do next
Drop shipping is an effective alternative fulfilment process for all types of merchants. If you’re just beginning, it’s a cost-effective way to get your business up and running without investing large amounts of capital. As an established merchant, drop shipping allows you to expand your customer reach and your product line with little-incurred costs.
The benefits of drop shipping make it attractive fulfilment process. Ultimately, the choice on whether or not or not drop shipping is best for you depends on the product you sell and your business model.
Are you ready to start a dropshipping business and need some help setting up your ecommerce store? That’s where we come in.
Adworx Digital opened our doors in 2013, to solely cater to entrepreneurs, small and start-up businesses. We are here to help you create and manage your online growth for your ecommerce business. We are more than happy to answer your questions or give advice. Feel free to contact us at any time.