What is dropshipping?

All of us are well aware of the word shipping but have you ever heard about the word dropshipping? Well it might remind you of shopping till you drop, but it does not mean that although in a way the meaning is related to shopping and dropping the goods to the customer. Ok let's remove the mystery associated with the word dropshipping, actually it is a term coined to refer to a unique supply chain management technique wherein there is minimal necessity of spending and blocking money to obtain goods/products for storage in inventory by the retailers. Rather in dropshipping the retailer simply takes orders from the customer and delivers the same to the wholesaler who then arranges to ship the product directly to the customer. The retailer in turn makes profit through difference in pricing between the wholesale and retail price. In the times of global outsourcing combined with the import/export business, the concept of dropshipping is really unique and innovative.

Dropshipping offers advantages to all the concerned parties whether be it local business, import/export or global sourcing. In the days of the yore dropshipping was not known to anyone but in these days global sourcing firms and import/export units do offer sufficient grounds for utilization of this concept. Dropshipping also offers advantages of low operating costs which are again useful in global sourcing work as well as import/export business. This is a huge advantage in that even individual retailers can offer competition to big retailing firms. Obviously such individual retailers do not have the financial muscle to compete on financial terms with big organizations and cannot open huge retail stores with truckloads of goods to fill them with. It is here that the concept of dropshipping comes in handy and they can compete with big businesses doing import/export and global sourcing. The investment that goes in opening huge retail chains is enormous and an individual investor can no way compete with big global sourcing and import/export firms on that scale. However there are also some drawbacks as small firms and individuals generally do not enjoy the brand name advantage of big firms and brand names. For example an individual name would not be know to many people unlike say Argos which is very popular store in the European region.

Despite the few drawbacks, the concept of dropshipping certainly offers a great benefit too all the concerned parties and in the coming times this is certainly going to get bigger and stronger.

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