Drop shipping is a tender, marketing or competitive based business where you sell and fulfill orders as a supplier in the retail – online mostly – space and deliver goods to a customer.
The reason why drop shipping is such a beautiful business model is because you don’t have any overheads and you don’t have to keep stock. It increases your responsibility of the risks involved and you get thrown in deep into logistics.
What I just said is my take on it, this is what Wikipedia says:
Drop shipping is a streamlined form of retail business wherein the seller accepts customer orders but does not keep goods sold in stock. Instead, in a form of supply chain management, it transfers the orders and their shipment details to either the manufacturer, a wholesaler, another retailer, or a fulfillment house, which then ships the goods directly to the customer.Wikipedia
You can read the rest of it on the link above.
Embrace Drop Shipping
I started a business a couple of years ago as an influence of my hobby and my knowledge/career. The idea of starting an online business was very intriguing to me so I had to try it out. As I did and it boomed. It was niche market – just executed right.
Never having met my supplier/distributor, I phoned them asking if I could sell their range of brands. They declined and kept telling me that people have tried selling the products online and that it doesn’t work so I just insisted that they needed to give me the opportunity to show them what I can do. So they did.
Turning over a million rand in a short period of time at a very small profit margin was fun. It wasn’t about the money, it was just an amazing learning curve and a great gain of knowledge in terms of logistics and business in general.
MARP = Market Agreed Retail Price – A price set by a supplier or distributor as a minimum amount that you are allowed to sell products for in order to not undercut the competition.
In Today’s World
Gigantic, successful business are using drop shipping or a very similar business strategy today. I won’t mention names of businesses but we all know who they are.
You buy something online from a website where the product is actually supplied by another company or business. The usual difference compared to drop shipping is that stock is usually still either kept at a warehouse for availability or that it travels through the warehouse for packaging and branding on it’s route.
Enjoy and embrace this way the world has adapted to.