As many people look for alternative ways of generating income during recession, the drop-shipping business seems like a viable option. Drop-shippers are part of a supply chain management system whereby they do not have to keep any goods in stock. The process works by the transfer of customer orders and shipment information to the manufacturer, or in some cases the wholesaler, who actually takes care of the shipping process.
There are many reasons why you might want to consider taking drop-shipping on as a business venture and start making more income to complement your earnings. The following are some of the reasons why you may want to become a drop-shipper.
- Drop-shippers do not need a physical warehouse to store goods. In fact, thanks to the advent of Web 2.0 Internet auction sites such as eBay, you can simple list new items directly from the wholesaler to the highest bidder.
- The entire process also eliminates the issue of duplicating efforts, labour and resources as only one warehouse will package and ship out the product.
- Goods can always be delivered by suppliers in the same country or region as the customer hence making it very easy for you to operate from anywhere in the world.
- There is no need for upfront inventory.
- If you are worried about what customers will think when they find out that you are not the manufacturer, you can arrange with the warehouse or manufacturers to place a private label so as to build better trust.
- There is positive cash-flow in the period whereby the seller has the customer’s money and is yet to pay the wholesaler.
Just like in any other business, there are risks involved in drop-shipping. However, as long as you maintain a good rapport with the manufacturer, you can avoid issues such as back-ordering and therefore form a better relationship with your suppliers and customers alike.
Do you have any opinions on drop-shipping?