These days, especially in the age of eCommerce, being a merchant really isn’t all that hard. Find a product, launch a site and you’re on your way.
Ok, so we’ve drastically simplified the process here…we can admit that. But the point is, anyone can sell something. Being a merchant is pretty easy. It’s being a merchant who stands out that’s the hard part.
The industry is constantly evolving. And the latest trend? Drop shipping. The idea of no muss, no fuss drop shipping is becoming more appealing and commonplace in the world of eCommerce, but how can you take advantage of this strategy while standing out? Drop shipping custom packaging is one way! Read on to discover the meaning of drop shipping as well as its advantages and downsides.
But First…What is Drop Shipping?
Drop shipping is a convenient, often profitable way to turn and burn product without having to deal with inventory, storage or shipping yourself. In many ways, it’s an eCommerce marketplace owner’s dream.
So, what does drop ship mean?
Drop shipping is an order fulfillment process in which stores pass on their sales order to a third-party supplier to handle the actual product packaging and shipping.
This hands-off process means stores don’t actually have to manage the products or orders themselves. Their job is to attract customers and complete sales, and then communicate these orders to a supplier. When the chain of communication and delivery is operating seamlessly, this can be a fantastic way to run a business without the need for a brick and mortar store or hefty inventory.
How the Drop Shipping Process Works
In a drop shipping system, retail stores don’t keep their products in stock. Instead, when a customer orders their product online, they will purchase the item from a third party and have them ship it directly to the customer. This eliminates the need to handle any product directly, maintain a warehouse or deal with stocking an inventory.
The process typically involves three stages:
- A customer places an order on an online retail store.
- The retailer sends the order and details to their drop ship supplier.
- The drop ship supplier is responsible for packaging and shipping the order directly to the customer.
Because the packages are typically customized and branded in the retailer’s name, customers will likely have no idea that their products are being sent by a third-party supplier. This makes drop shipping a highly efficient process with few drawbacks for online retailers.
What Are the Benefits of Drop Shipping?
With drop shipping, you sell the product, you collect the money, but you don’t have to handle any of the other aspects. As inventory moves, you simply purchase it from a distributor who then ships it directly to your customer. You eliminate the time, money and effort that goes into ordering, managing, storing and shipping inventory on your own. When done right, it can be a brilliant way to do business, particularly when first starting out.
With drop shipping, start-up costs and time-to-launch tend to be significantly less, and you don’t need a physical location or anywhere to store inventory. The ease-factor this way of doing business allows for is immeasurable. The model is scalable, too. Sell one product or one hundred different products…you earn money on the actual sales you make, as you make them, making risk largely a non-issue.
Once you’ve heard the perks of drop shipping explained, it’s easy to see why it’s an excellent choice for businesses. This is particularly true for start-up entrepreneurs who may not have the capital to set up a brick and mortar store and warehouse. The benefits of drop shipping include:
Easy Testing of New Products
Are you just getting off the ground and unsure which products are going to land with your customers? Drop shipping is a convenient and cost-effective way to try out new product categories or lines. You can list these products and gauge the reaction of your customers without investing heavily in wholesale inventory supplies.
When it comes to drop shipping, flexibility is undoubtedly one of the biggest perks. Flexible locations, flexible schedules and flexible product lists — you name it, the choice is yours. You’ll have the unique opportunity to work from anywhere and try out new products and strategies in a cost-effective way.
Low Risk, High Reward
The payoff for drop shipping can be immense, especially considering the relatively low financial and time investment required. There’s no pressure to sell your entire inventory in order to make a profit, because you don’t have a warehouse full of products. You won’t have overhead costs eating up your budget each month. Since products are only making one trip, there’s a reduced risk of products getting damaged en route to your customer.
What Are the Drawbacks to Drop Shipping?
No business model is perfect, and there are a few things to be aware of if you’re considering going the drop shipping route.
First, there’s the issue of control. When you drop ship, you have little to no control over quality, shipping speed, inventory and brand awareness. Personalized touches can be difficult to manage since you don’t actually ever have your hands on the product. And if things go wrong, like shipments are late, the wrong product is shipped, items arrive damaged or anything else happens that results in your customer being unhappy, you are to blame.
The ease of drop shipping has also made it a highly competitive field. Many online businesses have caught on to the advantages — including the easy start-up and minimal overhead costs — and begun selling items at low prices. This can lead to low margins and stiff competition.
Some drop shippers face difficulties when it comes to sourcing products from a variety of different suppliers, rather than using just one. This can lead to different shipping methods and prices, raising the costs for both you and your customers. Dealing with a variety of processing and billing structures from your suppliers can be tricky to track and requires a little extra organization.
One last potential downside is brand identity. Most brands that drop ship deliver in plain corrugated boxes to mask the reality that they aren’t actually the ones delivering the product to customers. Herein lies the problem: custom branding is a non-negotiable these days. Consumers are finicky and unforgiving. They are demanding. They want an experience. Custom packaging with gorgeous branding is one way to appease them. And as it becomes more of the norm, a lack of creative, intriguing, pretty or unique branding can be a deal breaker for many people.
Given these downsides, is drop shipping worth it? With customized packaging, absolutely!
Getting the Most Out Of Drop Shipping – Custom Packaging
Enter drop shipping custom packaging. As the trend of drop shipping becomes more prevalent, so too does the need to create a way for brands to stand out in the process.
One way sellers are combating this is by exploring options to make custom product packaging feasible despite a lack of actually touching products. Reach out to your packaging vendor to see about the possibility of them shipping your custom packaging directly to your drop shipping vendor. If this is a service they don’t offer, then you would need to coordinate directly with the drop shipper to see about the potential of you forwarding your custom packaging to them after you receive it.
Be sure to account for any additional time for delivery if there will be any delay or added time to accommodate this feature. It may take some diligence and a bit of extra work on your end to get it all set up, but the payoff should be well worth it.
Ready to learn more about how custom packaging can change your drop shipping game? Reach out to Custom Boxes Now today for more information. We’re the custom box experts, ready to help you, and your sales, soar. Start customizing your packaging right away by creating a custom box using our box configuration tool!