The only difference between drop shipping and the standard retail model is that the merchant that is selling does not own the inventory or stock it. Instead, suitable wholesalers are sought for the fulfilment of orders. Many times the merchant never sees or handles the product!
The main advantage of such a model is that it is possible to launch an ecommerce store without too much initial investment. Traditionally, ecommerce stores’ biggest challenge was to stock up inventory before launch. With drop-shipping, you do not have to buy the product unless you have already made a sale.
It’s easier to begin when you do not have to worry about the basics of the quantity of products in stock,the physical space required for maintaining the stock and inventory. Further, with drop shipping, ecommerce stores do not have to worry about packaging and shipping orders, tracking inventory and accounting for each product, handling returns and managing stock levels.
With drop-shipping, the overhead expenses are at a minimum. In fact, you can also run a drop shipping business from your home.
No restrictions for location
As long as you have the means of communication with suppliers and customers, and an internet connection, you can run a drop shipping ecommerce business from anywhere!
Wide selection of products
Because you do not have to actually purchase the product, you can offer a variety of products to your customers.
Easy to scale
When orders increase, the suppliers need to worry about the stock. You can easily scale as much as you wish – and suppliers will be more than happy to provide.
The other side of the coin in drop shipping is that margins are pretty low. But, taking it positively, you’ve invested low too – so low margins could be a good start until your business catches up!