Thursday, 22 September 2011

What is Dropshipping and what are Its Advantages


The internet has been rise to a number of new ways to do business. Doing business over the internet is known as ecommerce. There are many aspects of ecommerce and these are evolving with time. Before ecommerce only meant the transfer of money over phone lines. Then came websites that sold goods and services to people. These needed new things from ecommerce in order for it to work. For example, they needed secure ways of doing credit card transactions. Now-a-days, a large majority of business is done over the internet. There are many websites that sell merchandise and services over the internet and the model they work on is the same. Let’s look at Amazon.com as an example. When Amazon started it was a site that sold books. A person could go online and search for a publication that they liked. They then ordered it over the internet and it got delivered to their doorstep. The success of Amazon likes in the fact that a person could buy almost any book under the Sun unlike book stores that had a limited number of publications they could over.



Amazon.com used a system known as dropshipping. Dropshipping is a business model that separates the manufacturer and the distributer. In dropshipping the seller or reseller does not store the goods he is selling with them. They are stored in a warehouse somewhere and when an order is placed it is shipped to the person’s address.

There are many benefits to dropshiping that has made it popular. The first of them is that anybody can start a business without having to put up the storage and shipping structures. This means that a person start selling items on the internet and outsource the storage and delivery part of the job to another company. These kinds of business either outsource the store and delivery aspect of the business to drop shipping companies or tie up with the manufacturers themselves.

This saves them money not only warehousing and shipping but also on all the things that go with it. They do not have to bother about inventory management and security for the warehouse, things that would otherwise eat into their profits. They can also sell a much larger number of things as they do not have to bother about storing the goods. Lastly, they can sell over a much larger area as they are not limited by geography.

1 comments:

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