Drop shipping is a retail fulfillment method where a store does not keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer. As a result, the merchant never sees or handles the product.
In simple terms, when a customer places an order on a store that uses drop shipping, the store will forward the order and customer's shipping details to the supplier who will then ship the item directly to the customer. The store will purchase the product from the supplier at a wholesale price and then charge the customer a retail price for the product. The difference between the wholesale price and the retail price is the store's profit.
Drop shipping can be an attractive business model for entrepreneurs because it allows them to start an online store with a relatively small investment, since they don't need to purchase inventory upfront. It also eliminates the need for them to handle and store the physical products.
However, drop shipping also has some drawbacks. One of the main issues is that the store has less control over the inventory, shipping times, and product quality. This can lead to customer complaints and can damage the reputation of the store. Additionally, the store may have to deal with higher shipping costs and longer shipping times as the supplier is shipping the product directly to the customer.
To be successful in drop shipping, it's important for the store to carefully research and choose reliable suppliers, set competitive prices, and have good communication with the suppliers and customers. It's also important for the store to have good customer service and a streamlined returns process.