eBay Shipping:: Drop Shipping

Drop Shipping: Using Drop Shipping Involves Risk

With the advent of the Internet, shopping is made available to buyers 24/7 and profitable for a retailer and a wholesaler even with the absence of a tangible inventory. The process is oftentimes done through drop shipping, where an e-tailer or an online retailer uses the Internet as a venue to sell goods and transfer customers’ orders to a wholesaler who is responsible for shipping the goods directly to the buyer.

In this kind of set-up, transaction begins when a buyer finds a product in the e-tailer’s website and purchases it online. The buyer provides pertinent information such as address and phone number; the e-tailer takes note of this and passes it on to the wholesaler. The wholesaler then makes the package and sends it over to the buyer. The e-tailer profits from the difference between the wholesale and retail price.

As simple as it may seem, there are also some risks involved in drop shipping which may adversely affect both sides. An example would be when the wholesaler has sold out an item that the e-tailer still has for sale on his site. In some instances, back ordering may be done, but this would entail a long wait for arrival of the new products, and a bad reputation for the e-tailer.

Another is wrong shipment of the product, in which case the existence of a return policy is important. It might be possible for the e-tailer to grant returns; however, if the wholesaler refuses to do the same, the retailer contracts expenses and losses on his side instead of gains. The question of who will answer to customer complaint and dissatisfaction with a product is a baffling one.

Marketing strategies are also an issue. Launching a website is one thing, but being able to maintain a target market and actually sell oneself as a reputable seller – not just the products – is another. E-tailers face the responsibility of continually expanding their reach by promotion and updating themselves of whether enough buyers are browsing their sites and if the site remains marketable.

In relation to this, e-tailers are also faced with the dilemma of losing clients to their wholesalers, if they decide to break off the drop shipping set-up and put up their own marketing labels.

With all of the risks that drop shipping presents, it becomes evident that common trust and cooperation should exist between an e-tailer and a wholesaler. Vital to the success of drop shipping is the team effort occurring between these two key persons. Therefore, it is of utmost importance that a contract be made with the wholesaler; that there is a set of guidelines that will dictate what each party must do and that both ends must stick to the agreement. They must also continuously assess the status of their business and work in collaboration towards providing an excellent online shopping experience for their clients.

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