What is drop shipping?

eCommerce drop shipping uses a third party to manage inventory and shipping, so you can focus on sales and marketing. Learn how drop shipping works and why use it.

What is drop shipping?

In eCommerce, drop shipping is a fulfilment method where you don’t need to buy inventory upfront, nor do you need to worry about storage or shipping. Instead, when a customer makes a purchase from your website, the order and shipping details are sent to the supplier or brand, who manages the shipping. You make a profit by setting a retail price higher than the supplier’s wholesale price.

Why use drop shipping?

Drop shipping is a popular option for many eCommerce businesses, particularly for larger products, as it allows them to offer a wider range of products without having to maintain inventory or handle shipping. Here are some of the key benefits:

• Lower overheads – because you don’t need to purchase products upfront, you can start selling without a large initial investment. And, because you’re not having to physically hold the products, you avoid storage costs, too.
• Less risk – you can trial products without the risk of having to purchase large volumes upfront, which could potentially leave you with unsold product.
• More flexibility – offer a wider range of products to your customers without having to worry about storage.
• No shipping and handling – the drop shipper takes care of shipping the product directly to the customer, so you don’t need to worry about this side of your eCommerce business.

How does drop shipping work?

Once you’ve established a relationship with a drop shipper, the process is simple:

1. Your customer places an order on your website
2. You forward the order and customer details to the drop shipper
3. The drop shipper picks, packs and ships the product to the customer
4. You pay the drop shipper wholesale prices for the product, and keep the difference

By leaving fulfilment to the experts, it means you can focus on marketing, sales and customer service – which will ultimately help you grow your business.

How can I get started with eCommerce drop shipping?

If you’re thinking about setting up a drop ship store, have a think about the types of products you want to sell. Research competitor sites to see what they’re selling (and to check their prices) and look for suitable suppliers (see below). Once you’ve found your suppliers and set up accounts with them, then it’s time to build and promote your drop ship store – and ultimately start bringing in the sales.

How can I find drop shipping suppliers?

To find the best suppliers for your business, you may need to do a little digging. Major supplier databases like Alibaba and AliExpress can be a good place to start here. You may also want to research local suppliers who store their products in Australian warehouses, and who may offer more niche products. Take the time to speak to potential suppliers – for example, you could ask for samples, get complete clarification on all their fees, and check if they have minimum order requirements.