Drop shipping is the term given to the practice of offering something for sale that you do not physically own.
With the stellar trajectory of online shopping, many entrepreneurs wanted to get in on the modern gold rush offered by the internet, and although drop shipping isn’t a new concept, the internet has taken ownership of the phrase.
Online store creators such as Shopify have made it very easy for anyone to be up and running with an online store in a very short space of time.
This has opened up a world of possibilities to those who realize the fundamental basics of selling is the combination of the right product, in the right place and targeted to the right person.
Easy to setup online stores, a vibrant global marketplace and the growth of online shopping has created a perfect storm in which drop shipping has taken off.
How Drop Shipping Works
Let’s say you are looking for a gadget for a friend online. He’s into outdoor pursuits and you find a great flash light in an online gadget shop.
You purchase the flash light.
However, the company that owns the website don’t have the flash light.
They have yet to buy it.
When they see your order come in, they purchase the flash light with your money from a third party.
The delivery address details you gave are passed on to this third party and they fulfill the order.
That’s drop shipping in a nutshell. You found a great item, possibly on a website that curates many other cool items in an easy to scroll list in their shop. Each time a customer buys a product they take that money from the sale and use it to buy the item, at a lower price from elsewhere and arrange for it to be shipped to you.
Have I Been Cheated?
Yes and no, but most probably no.
Although figures vary on the percentage of online stores that are drop shipping, the figure is certainly above 20%. Drop shipping is a viable, respected and time honored business practice.
You should be able to spot an online store that drop ships. There should be a prominent disclaimer displayed on the website, but this isn’t always the case.
Check the delivery and shipping details and you should be able to tell immediately from the wording that the product you buy is not going to be shipped from the company that you are paying money to.
Examine carefully expected shipping times as well. If the item you bought is coming from Asia, there may well be a delay in delivery.
Either way, you have to decide if the practice bothers you. For many, the only difference they see is tat the item was fulfilled from a country that they were not expecting it to be fulfilled from.
If shopping locally and supporting products made in your own country, then receiving a package from China may be problematic.
The Benefits of Drop Shipping
The immediate and obvious benefit of drop shipping is for the person offering the item for sale in their store.
They purchase the item for a fraction of the cost that they have sold the item for and profit from the difference.
You benefit by having the opportunity to buy a product that you may not ordinarily have found online. Many drop shipping stores put a lot of time and effort into curating shops that have a huge variety of products.
With the growth of drop shipping products form China, the country has implemented ePacket shipments. This is a special form of EMS shipment that has reduced shipping times from China to most Western countries to around 10 days.