Tuesday, August 4, 2009

The Benefits of Dropshipping by Shopster

Article provided by Shopster

Dropshipping is a business strategy best utilized by those who want to sell online, but are unable to invest in purchasing inventory, or the storage space to keep it. In basic terms, to dropship is to sells goods on behalf of a supplier who then fills the order and ships it to the purchasing customer on behalf of the seller.

There are several benefits to dropshipping, but the two main ones are: no upfront inventory to purchase and a low start up cost. Dropshipping is ideal for those who want to start a business, but can not afford high start up costs.

Other benefits of dropshipping include:
  • Allows the retailer to focus on making sales, and making more money. As it is the supplier that packs and ships orders, once a sale is made the retailer does not have to do anything except focus on making more sales.
  • Dropshipping can reduce shipping and handling costs. As the product is delivered directly to the customer it does not have to be shipped to the retailer. Thus saving the cost of that one delivery. The savings can then be passed onto the customer by the retailer.
  • It gives retailers the opportunity to test out new products lines without having to buy the inventory up front.

One criticism of dropshipping is that at times it can be challenging to find competitive pricing on an item, especially if it is popular. The base price on dropshipped products is not as competitive as wholesale or bulk, but for the most part the prices are cheaper than what you would find in a store, and the retailer can still offer competitive pricing.

Finding well priced dropship products is possible with research and a competitive niche or growing market opportunity. Watch out for over saturated markets, like the Nintendo Wii for example. While these items are popular with buyers, there are thousands of sellers trying to offer the product at the lowest price, resulting in small (if any) margins.

Shopster is a full business solution enabling eBay sellers to either start or expand their eBay business by connecting sellers to suppliers. Shopster is focused on drop ship product sourcing and listing tools for any level of seller.

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