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Dropshipping: Run Your eCommerce Business With No Inventory

If you are hoping to open an online store without worrying about handling inventory, dropshipping may be the solution for you. Dropshipping is a way to get into retailing without inventory risk. Instead of keeping your own warehouse of inventory, which ties up capital, you partner with a wholesale supplier. The supplier stocks its own inventory, you transfer customer orders and shipment details to them, and they ship the goods directly to the customer. Typically, the package arrives to the customer with your logo and company name on it, so they are completely unaware of the supplier’s existence.

With dropshipping, you don’t have to purchase a product until you’ve made the sale and have been paid by the customer. This eliminates any major up-front inventory investments, and makes it possible to start a successful online store with very little money. The customer gets their order, and you do not have to focus on the physical fulfillment or shipping. Leaving the fulfillment up to the supplier gives you more time to work on marketing, customer service, and operations.

If you decide you want to supply your store through dropshipping, you first need to find a legitimate supplier. This can be a more difficult process than expected. If you already know what products you want to sell, the easiest way to find a supplier is to contact the manufacturer and ask which wholesalers they use. Not all companies will be willing to dropship but it gives you a good starting point.

You can also pay to receive a directory of wholesalers divided by niche, industry, and type of product. There are many companies out there that offer paid directories filled with quality information. If you don’t know exactly what products you want to sell, you’ll need to use Google to locate your wholesale supplier. Wholesalers are notoriously bad at SEO, so it may take you a few pages to find a legitimate company.

Before you use a dropshipper for customer orders, do a few test orders to make sure the supplier ships its packages on time, sends the right products, and so on. Evaluate their technology, location, staff, and efficiency to make sure it up to your standards. To be sure you’re working with a reputable company, remember that suppliers will never require a monthly fee or charge – they only get paid for product orders. Using dropshipping will also slightly increase the price of the product, as the supplier must charge higher than wholesale to ensure they have solid profit margins.

When an order has been placed in your store to be dropshipped, it is your job to send the order along to the supplier. Once the customer’s payment and order has gone through, you forward that information to the supplier. Some suppliers use email for this, others require phone calls or manually ordering it on their website. They’ll use your credit card information, which they have on file, to bill for the wholesale price of the product, as well as shipping and other fees.

Then, the wholesaler will send out the order. If the supplier has a well organized, technologically up-to-date system, orders can be shipped out within a few hours. Once the order has been finalized, the wholesale supplier will email an invoice and tracking number to you. It is up to you to forward the tracking number to your customer. Your profit is the difference between what you charged the customer and what the supplier charged you.

Of course, this process of coordinating with the supplier can be automated through a software like Jazva that manages dropship orders. With Jazva's ecommerce software, you can automatically send orders to dropshippers and put in setting like the minimum amount that need to be met before orders are sent and how frequent you want to have orders sent. You can also attach prepaid, Jazva-generated mailing labels to the dropship order.

Using dropshipping may be easy, but the downside is thinner profit margins. There can also be inventory issues, shipping complexities, and supplier errors that ultimately you will have to deal with for the customer. But by using an automated software, you can eliminate many of those issues and complexities and enhance your working relationship with suppliers, which is tremendously helpful in building a thriving, profitable dropshipping business.

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Ryan Elich

Ryan Elich

Ryan Elich is the director of sales at Jazva, a unified multi-channel e-commerce solution that manages orders, listings, inventory and shipping, all through one platform. Ryan has been in the e-commerce industry for over 6 years, and his passion is selling baby potty training products online. Outside of work, he enjoys time with family, fantasy sports and Disneyland.