Inventory or warehouse maintenance and its cleaning is a major cost addition to your company’s revenues every year. For new businesses involving a huge chunk of their investment in inventory rental and management is at alarmingly high risk. Considering the skyrocketing prices of real estate, renting a warehouse for inventory is an absolute predicament. Most new startups tend to have limited human resources and money. These resources need to be carefully allocated and judiciously used. Meticulous strategies have to be implemented to achieve profits in the early stage of a business. This is where dropshipping offers a better deal to these startups.
Short Briefing about Dropshipping
Dropshipping is the process of not maintaining an inventory by a retailer and later on ordering it from a third party when demand is created. By now it is quite clear that dropshipping is only for retail eCommerce businesses. Whenever a demand is created, the product quantity is simultaneously ordered to a seller. Let’s look into little more details on dropshipping.
Benefits of Dropshipping in the Businesses
As I said previously, dropshipping is very crucial and beneficial for businesses of every size and niches. Followingly I am mentioning some of the benefits of using Dropshipping in retail businesses,
Focus on building high-quality particular expertise.
When a new business is started, a lot of things need to be streamlined like work delegation, employee management, taxes, business strategies, and product marketing. In such times as building a proper brand name and expertise are the most important aspects to attract loyal customers. Therefore dropshipping allows both sellers and retail companies to focus on their particular expertise. The sellers can focus just on production and the business will work on marketing. This way much effort is reflected towards quality service and products ensuring excellent customer satisfaction.
Zero inventory costs to the company.
Maintaining a large and clean inventory for quality products is a tedious, time consuming, and revenue depleting task. The warehouses need to be rented in nearby places, cleaned to meet industry hygiene standards, and closely monitored. Also tracking the deliveries and shipping is another headache. Instead relying on partner sellers to provide their products with guaranteed delivery and quality is a boon to any retail business. The risks involving maintenance of a warehouse are completely eradicated. Hence all the revenue that was previously expected to be invested in warehouses can be used to procure phenomenal marketing human resources.
Logistics services are drastically reduced.
We all know how logistics is mostly avoidable due to its high maintenance system. Big retail businesses have a separate portal only to handle the supply chain. But this is not possible for small retailers or startups. But it can be specifically avoided by adopting drop shipping. The long process of printing order details, product packaging, and confirming the status of parcels is completely lined out. So the duty of order fulfillment lies upon the sellers and the retail business can be a practice only the monitoring. This keeps the information flowing required to the company.
It has Disadvantages too…
Dropshipping seems like it is an ultimate solution to all retail business problems, but with great advantages, it also has disadvantages too. The retail businesses need to maintain a crucial and diplomatic relationship with the sellers. If there is any minor conflict between the seller and the business, it might affect product availability and ultimately customer numbers. This will be a great blow to the brand image. Also, a direct check of all the product quality is difficult to analyze. Sellers might not deliver quality product time again to achieve more profits. This indirectly affects the customer experience with the company affecting the overall branding.
But these hassles can be easily avoided if the company maintains excellent relationships with its sellers. Regular quality audits and product flow presentations will help to keep a check on the seller. Process Audits on production should be treated as a must to ensure that there isn’t any violation of the seller-retailer code. Information between the seller and the business should be transparent and well delivered. Let’s conclude with some Lachlan Delchau-Jones priced words “Drop shipping is the entry point for a lot of people to business, eCommerce, and entrepreneurship. It’s the perfect first business.”
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