Class notes
Drop Shipping_Digital Commerce_GS International Trade
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Notes in English on Drop Shipping from the subject “Digital Commerce” of the GS for International Trade.
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DROP SHIPPINGDrop shipping is a 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.
As such, the retailer is responsible for marketing and selling a product, but has little or no
control over product quality, storage, inventory management, or shipping. This eliminates
the costs of maintaining a warehouse – or even a brick-and-mortar storefront, purchasing
and storing inventory, and employing necessary staff for such functions. As in any other
form of retail, the seller makes their profit on the difference between an item's wholesale
and retail price, less any pertinent selling, merchant, or shipping fees accruing to them.
Procedure
A drop shipping business model does not require a brick-and-mortar store. It may be
eliminated entirely, or combined with drop shipped order fulfillment business model.
A physical retailer may keep potential drop shipped items on display, provide details on mail
order items via a catalogue, or maintain a website with information available only online. A
virtual retailer only has a website.
Products may be listed by a drop shipping retailer as available but actually be back-ordered
either with the wholesaler or the item's manufacturer. Such potential delays in order
fulfilment are not always known, or even when known disclosed, by a seller. They also can
be extended, beyond the control of the seller. Likewise order fulfilment and shipping delays
are beyond the seller's control, yet can reflect badly on the purchaser's ultimate satisfaction
with their transaction. This puts a premium on timely and accurate information provision by
the seller on both sides of the purchase, both before and after it is made.
, Dropshipping is a fulfilment method. When a retailer sells a product, it
purchases it from a third-party seller, who then sends the item directly
to the customer.
So, dropshipping takes out the process of getting items delivered to
your company first, meaning you don’t have your own inventory of
products.
It cuts out the unnecessary task of receiving orders, storing and sorting the
products and then sending them. This saves money on postage, storage
space, stock and the workforce needed to process the orders. But, while it has
its advantages, dropshipping isn’t ideal for everyone…
ADVANTAGES OF DROPSHIPPING
The startup costs are smaller
In order to set up an online business, a good chunk of capital is usually
required to buy your inventory of products.
Dropshipping eliminates the risk of spending your money on unsold
stock.
You can offer items almost instantly
Usually, when a retailer wants to start selling a product, they’ll have to
wait until all of their stock has been shipped in order to begin
advertising them on their website.
After all, what’s the point in offering an item for sale when you can’t
actually sell it?
Using dropshipping means that when you decide you want a product
on your site, you can start advertising almost immediately.
You can offer a wider range of
products
Having the ability to offer a wider range of products is always
something a company can aspire to, and with dropshipping it’s
possible.
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