How Does Drop Shipping Work?
Here are six simple steps explaining how drop shipping works::
Step1: Retailer determines a target audience and what products best suits their needs.
Step2: Retailer partners with Suppliers that can fulfill orders on demand.
Step3: Retailer then lists the products on their personal ecommerce website.
Step4: Customer places an order on the Retailers website, typically paying for both the product and shipping fees.
Step5: The Retailer would then contact the Supplier and pay for the goods at a lower rate while giving them the Customer’s credentials as the shipping address.
Step6: Finally the Supplier packs and ships the order directly to Customer.
For visual learners, here’s a chart detailing the supply chain to make it a little easier to understand.
The customer orders a product from your e-commerce website, which is listed at a profitable margin.
You then forward the order details, either manually or automatically, to the supplier, manufacturer or wholesaler.
Then the Supplier charges you for the product at a cheaper rate, and ships the product directly to the Customer. The shipment is sent without an invoice and is marked with your logo. Thus, the customer is none the wiser. This is generally known as “Blind Dropshipping.”
In conclusion, drop shipping is one of the simplest business models to be implemented in the e-commerce industry. You can theoretically run your own drop shipping business from anywhere in the world. If you have a stable internet connection and a laptop you can potentially start today.