Drop-shipping is a retailing method where merchants purchase products and have them shipped directly to customers, having not handled the items themselves.This unique retail model has the main advantage of requiring less capital to start and operate. Launching a drop-shipping operation does not require investing large sums of money in inventory. You only purchase a product after you have finalized the deal with your customer.
Moreover, a drop-shipper has very low overhead expenses and a wide selection of items to sell.That said, drop-shippers face many challenges on eCommerce websites. If you are new in the game, the following are three useful tips which you can apply to deal with some of these challenges.
- Low-profit margins
The biggest challenge that drop-shippers face is minimal profits. For each item sold, a drop-shipper only retains a small profit, which is made even smaller by the cut-throat competition.To rake in the big bucks; therefore, a merchant has to make as may sales as possible, which brings to light yet another challenge: too much work.However, you can minimize the time required to process sales by posting similar items as multiple listings with a fixed price so that you only have to make one compelling listing, and then include new items as they come in.
- Variable pricing
The price tag a drop-shipper attaches to an item usually depends on the price set by the supplier. Consequently, the merchant is not in control of price changes.This situation is even worse in bidding sites like eBay, where the buyers dictate the item’s price through competitive bidding. To gain more control of your item’s prices, fixed price listings are the way to go. Alternatively, you can put a reserve price on your item and accept bids from the set minimum.
- Product availability
Stocking your items is a hassle, but it helps you to easily track which ones are available for sale, and which are out of stock. By sourcing items from multiple suppliers who also have other orders from other merchants, a drop-shipper runs the risk of selling an unavailable item.
The only way to go around this hiccup is to ensure your store is in seamless sync with your suppliers, through daily reports about what they have in stock and how they envision the inventory to change. This will help you to keep the buyer fed with correct information about an item’s availability and when it is expected to arrive.
Drop-shipping might be easy to start, but to ensure success, it demands just as much hard work as any other income-generating endeavour.