Dropship as a supply chain model is really unique for more reasons than one. One of these reasons is that it allows small retailers to keep costs low whilst supplying a variety of products to their customers across the word. It’s simple — they set up with dropship suppliers who transport products directly from their storage warehouses to the retailer’s customers. We will have a look at how retailers are looking to minimize costs in this world of rising inflation and lowering disposable income that utilize this novel supply chain method of dropshipping to keep their business going and continue to offer their customers a high quality, varied selection.
It’s easy to imagine how this keeps costs low, the retailers do not need to engage with storage, logistical and transport companies to store, package and ship products. Often, stockists and storage companies take a significant percentage of a retailer’s margins. Even transport companies can be expensive and dependent on local and global trends that dictate prices. This is even more true if the retailers choose to import from abroad — the bureaucratic red tape can be incredibly complex, and be an expensive endeavor if one does all the work directly. This is where dropship really shines, they save you money on both the aforementioned aspects. Dropshippers operate in bulk due to their dealings with a large number of retailers they work with, and thus can negotiate lower prices with the aforementioned agents.
For importers, it can be cheaper to use a foreign dropshipper that ships directly to your customer’s doorstep. While this may not be true if you’re improving whole containers from a country, for some retailers, dropshipping can represent cost savings. This is even more true in the case you ship globally, or even only in certain regions. We can illustrate this using an example. Your small business may be in the niche of selling handmade, solid wood furniture. Thus, you’re likely to be importing the furniture from either India or China where this type of product is popular and made with affordable prices. As opposed to importing small quantities from abroad and storing them within your storage unit (or paying a company to store products for you), only to ship the pieces to your customers worldwide using another shipment company, there’s another option. An effective dropshipper lets you skip a step in the process entirely — they can ship products directly to your customers’ premises rather than having to store them yourself. This is key to keeping costs low and investing the money in ways of increasing sales, especially advertising and market research.