Drop shipping

Drop Shipping; An Online Business with No Inventory!

The evolution in the digital age leaves a trail of faster, innovative and better ways of doing business; e-commerce. Fancy words given to new ways of doing things has become a norm and the good old brick and mortar shops are fast evolving into virtual shops where inventory and warehousing facilities for retailers and distributors are fast becoming a thing of the past. What seems to be the new trend is the concept of DROP SHIPPING, yes Drop Shipping.

I must think that this concept of drop shipping was first practiced by the early days of amazon.com in the dotcom boom, very early on their journey of building the largest bookshop(virtual) on earth. You might disagree and credit Shopify or the Chinese for how widespread the concept had grown with their usage but that is a discussion for another day.

drop shipping explained

Not too long ago would we walk into physical shops and without altering a word to the shopkeeper, scan through the inventory on the shelf and either make a purchase or leave with the notion that “if it is not seen, it is not bought”. These days categories of products have now been listed online showing availability of inventory without the customer having to have a feel of it except images, descriptions, reviews, ratings and or of the product or service offerings and its related accompaniments or accessories/add-on.

Drop Shipping Defined

The journey has far advanced into what we now know as Drop Shipping. Google search the word “drop-ship”, lays it down in simple terms as ” provide (goods) by direct delivery from the manufacturer to the retailer or customer.”

Drop shipping as a supply chain management method in which the retailer does not keep goods in stock but instead transfers the customer orders and shipment details to either the manufacturer, another retailer, or a wholesaler, who then ships the goods directly to the customer.

wikipedia.com

Look at it as a virtual shop without inventory handled by the shop keeper but the shop keeper has customers and order for which needs fulfillment. The manufacturer or supplier offers you the shop keeper the opportunity to service consumers/shoppers/retailers on his or her behalf without asking you to buy and keep the inventory and bear the cost of onward shipping to the end users. You make money as commission for the sales that passed through you and fulfilled.

How Do I Get Started?

beginner's guide to drop shipping

There needs to be some basic must haves before one can attempt to establish a drop shipping business.

  1. Social Media Channel for which there needs to adequate following which serves as your primary/potential customers.
  2. Hands on knowledge about negotiations/hedging and getting the best deals done for maximum profit.

With clear knowledge of the above there are things you need to be clarified on when finding a suppler or manufacturer with your required inventory.

  • Shipping timelines when orders are placed by an end user, as well as the shipping methods to be used with its associated charges.
  • Understand the Quality Control System to avoid dealing in sub-standard products as well as full knowledge of the warranty terms.
  • Also, having the opportunity to access the professional photos of the supplier or manufacturer in high resolutions to aid in your Social Media Marketing Campaigns to grow sales.
  • Available options on prices to be negotiable as well as the percentage of commission on each sale or on bulk purchases.
  • Possibility of forward contracts that allows for hedging.

This is enough to get you to proceed to finding which categories of products you want to deal in.

ALSO READ: Hedging; Less Loss for Online Buying and Selling?

Requirements

A good market research which is in-depth is needed to unlock the categories of products for which you can grow sales. Find your niche that you can work with, deep niches are based on in-depth and technical expertise of the product category for which you may be highly knowledgeable in. The niche is to allow you capture, attract, grow and keep customers.

The next thing is to register your business of the statutory and regulatory bodies in fulfillment of your tax and legal obligations to facilitate your business.

Finding a platform to display your products could be a daunting task if you have not completed the basics of getting started.

Facebook with its allied Instagram serves as a great place to display your products as well as promote them for your following as well as paid advertisements to get sales.

The e-commerce web based software giants WOOCOMMERCE has now developed a platform in partnership with Facebook called Woo for Facebook providing access to the Facebook and Instagram community as customer base whiles exploring their advertising functionalities. This works amidst the host of other options including having a website.

Getting a dedicated e-commerce website might cost quite a some of money which could be avoided by sticking to the a Business Social Media Pages options. The next stage is your listings.

READ MORE: 5 “Must Haves” To Build A Successful Online Business

Managing your listing could be the tricky part. This involves inventory that is not managed by you but by the manufacturer or supplier.

This is where we recommend a cloud inventory management software that synchronizes your online inventory with the physical inventory of your pool of suppliers and or manufactures to facilitate availability, ability to forecast on demand as well as hedge to minimize the loss in times of volatility of Forex.

Key Notes

You are off to real success by way of good sales and great commission but we at AFROSAGES would like to offer you a few key notes to help you do great in this profitable and growing venture.

  1. Your inventory listing should be based on market research and not what you as an individuals feels would be liked and bought.
  2. Develop a unique niche to ensure there is monopoly or little competition in the areas and categories of products you wish to deal in. Have a solid binding agreements with your suppliers based on volumes to ensure you lock your channels for growth and profits. Have a unique selling proposition.
  3. Make provisions for customer returns and complaints for which you need to handle returns in a professional way in protecting the credibility of your enterprise. Pricing, Quality and Shipping is key to staying relevant in the e-commerce space, if for a fault in any be ready and willing to compensate the customer for the time spent and the inconvenience.
  4. Engage with Social to ensure they feel your physical presence as providing solutions to help solve their worries and not just selling products for money.
  5. Invest in running promotions.
  6. Have binding agreements with your suppliers; agreements that make you buy in bulk for lower prices and higher margins based on volumes to be able to run shop discounts.

Get social with us for more updates in ensuring your enabled growth and profits remain sustainable as well resources to get you started if you want to try drop shipping or any other start ups with Social Media as a boost to your sales and marketing needs.

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