Saturday, December 22, 2012, AM | 1 Comment
In most retail and wholesale businesses, your company has to purchase large shipments of inventory. You are responsible for storing your items safely. Someone from your company has to locate the items, package them properly and deliver them to a shipping company. This process is a lot of work and many ecommerce businesses underestimate how much they will spend on storage and order processing.
If you have built a successful eBay business but you don’t want to multiply your workload just to expand it, consider adding some dropshipping to your success strategy.
What is Dropshipping?
The dropshipping company is an ecommerce seller that has a warehouse full of products to sell. Rather than setting up and running their own storefronts, they make contracts with other companies to handle the marketing and sales part of the process.
Dummies.com says that retailers purchase items and resell them without having to receive and store them. The dropshipper handles the packaging and shipping, as well as any inventory management needed between sales. You just gather a customer base and collect your part of the profits when items are ordered.
One reason many eBay sellers add dropshipping to their store is competition. With retailers from around the world all using the auction platform, it can be hard to stay profitable when selling against people located near hubs of inexpensive manufacturing.
Dropshipping allows you to order items directly from the producers, but you don’t have the additional costs that come with warehouses and packaging for each item.
You can also test out new products and niches without making a big commitment, according to Practical eCommerce.
Augmenting your current offerings is easy when you aren’t responsible for moving the products if they prove to be less than popular.
Handing over part of the sales process can put your established brand in jeopardy. Some dropshippers have limited to no refund policies, warns Ecommpedia. This could lead to some very unhappy customers that hold you responsible for the issue.
You also give up your ability to personally oversee the packing and shipping of items. If the workers at the dropshipping facility aren’t doing their jobs, you won’t know until your orders are seriously backed-up. You will need to find a partner that is very reliable and professional if you don’t want to alienate your current customer base.
How to Succeed
There are a few well-defined paths to success with dropshipping on eBay. The eBay Workshops team says that not every item can provide a healthy profit when you use this type of shipping.
You will need to identify products that aren’t already saturating the market and that can provide a fair profit for each sale. If you can’t find items that match your current demographics, you may find more success by opening a second store than trying to integrate random products into your existing store.
Use the flexibility of dropshipping to your advantage to stay competitive. Keep your eyes open for new deals and products to keep your customers coming back for more.
Ted Hosford has worked as a business software consultant for many years and enjoys sharing his tips and expertise on various business blogs. Click the link to find eBay shipping solutions for your business.