A difficult part of product-based businesses is having the actual products available for customers to purchase. For storefronts, this requires an inventory and generally that inventory must be stored somewhere. Therefore, small businesses must purchase or rent larger retail spaces to store the products and purchase products ahead of time to stock an inventory. Needless to say, if customers are not breaking down the doors, then this inventory becomes an albatross. Fortunately, dropshipping is a simple alternative allowing small businesses to avoid costly inventory purchases.
The great thing about dropshipping as an alternative to funding an inventory is entrepreneurs get all the benefits of having inventory without the logistical and financial difficulties. Dropshipping works the way online ordering works – customers find the product they want, order the product, and it arrives at their door. For a brick-and-mortar retail business, dropshipping works as well. The younger a business’s customers are, the more comfortable they are with placing an order and waiting for it to be delivered. So, all a small business needs to do is get hooked up with a dropshipper, and as customers place orders the money goes to the business and the dropshipper handles all the fulfillment issues.
Dropshipping saves money because it’s a pay-as-you-go model for the customer and the business. In the past, funding an inventory meant buying goods at wholesale prices and then figuring out the right retail price for customers. Because the wholesale cost is fronted, the business is left in recovery mode, and hoping customers purchase enough products not just to cover the cost of purchasing products, but providing a profit as well. Dropshipping pays the cost of the product at the time of the customer purchase, so the business receives the margin as payment. Therefore, the dropshipping company is the one paying wholesale for products and storage. The business is just the storefront allowing customers to get the products.
Dropshipping is tailor-made for e-commerce but the reality is brick-and-mortar businesses have no problems using dropshipping. A physical business may need a few “floor models” for customers but the ordering system allows customers to get exactly what they need. So, the truth is there’s no “or” choice but an “and” with the idea behind a storefront and e-commerce. The versatility of a business is a selling point in today’s world, especially after the pandemic when virtual business is clearly ascendant. Dropshipping makes every part of retail easier because it allows more options at a lower cost.
There are plenty of ways to get started with dropshipping, but the best place to get questions answered is with an ROI consultant. Find out more about how ROI is ideal for dropshipping by sending an email here!