Dropshipping – bigger range without the risk
For retailers – online or otherwise – managing and storing inventory is one of the biggest risks. Stock doesn’t just take up space you have to pay for, it also freezes cash, sometimes permanently if the product fails to sell.
Many retailers are turning to a new fulfilment method that removes much of the risk. Using the dropshipping method, you don’t hold the products in stock.
Rather, a retailer purchases individual items from suppliers only as they’re bought by customers. The supplier then ships the item directly to the customer.
The benefits of dropshipping
To capture the benefits of dropshipping, many brands operate an entirely dropshipping model, while other retailers use a mix.
1. Keep cash flowing
Instead of tying up your cash in inventory, you keep it flowing through your business. Using a dropshipping model, you only need to buy-in inventory once it’s already been on-sold.
2. Add SKUs easily
Without the need for large capital investments to buy-in stock and pay for warehousing, dropshipping makes it fast and easy to expand your range – or launch a new one.
3. Take on less risk
Because you’re not committed to selling-through any inventory there’s less risk that you’ll end up with un-sellable items.
4. Test new products
Even if the traditional model is right for your business, dropshipping is a low-risk way to test the appetite for a new products range before investing.
How to make dropshipping work for you
Getting dropshipping working well for you requires seamless integration between your online store and the supplier. This ensures the end customer has the same experience, regardless of where the product is coming from.
That integration must start with an eCommerce platform that is flexible enough to deliver this experience to customers. Working with multiple suppliers all with different ordering systems can create some complexity, which can be overcome with the right software and expertise in integration.
Of course, dropshipping does come with a few challenges. You have less control over the order fulfilment, which means you’re trusting someone else to deliver on your promises around stock availability, timelines and customer service.
Could dropshipping work for you?
Improve your cash flow and lower your risk with dropshipping. Try new product lines and grow your online business through smart integrations with suppliers. Implement software that can make this easy and seamless, and you’ll never look back.
Want to find out if dropshipping is right for your business? Contact the eCommerce experts at the Solutionists.