What is Drop Shipping?
Drop shipping is a popular type of E-commerce retail sales method. In this case, the seller does not own any inventory or stock. When the seller receives an order, they purchase the required products from a third party and have the products shipped directly to the customer. Basically, the seller need not handle any products directly.
When and how did Drop Shipping come into the picture?
Believe it or not, but Drop Shipping was started by accident in the age before the internet. Many big American companies would send out their product catalogues by mail. Customers could use these catalogues to place an order on the phone and the order would be delivered to their doorstep. Over time, these companies found it extremely difficult to keep up with the constantly growing demand. To combat the demand, they set up gigantic warehouses and overloaded them with stocks. These warehouses were set up in such a manner that it was easy to locate even a single item and have it shipped out as soon as possible.
Looking at this, a third party saw an opportunity. They started including the products sold by the American companies in their own catalogues and asked people to place orders with them for quicker responses. While selling the products, they carved out a good profit margin for themselves. And, that is how the drop shipping model came into the picture.
Around the 90s, when the internet started picking up, a lot of companies started discussing E-commerce. Many companies pitched investors and promised great returns on E-commerce sales. Investors loved the idea that was much ahead of its time and started pouring millions into these businesses. But, given that the idea was much ahead of its time, a lot of companies ended up failing and losing all investment. However, Amazon and eBay survived.
These two companies also made the drop shipping model much easier. A regular company or third party drop shipper did not need to create a website and spend money on advertising their products. Instead, they could just list themselves on Amazon and eBay allowing the drop shipping to be done hassle-free.
Drop Shipping sustainable?
There’s a constant debate around the fact that drop shipping is sustainable. Some people believe that only Green Drop Shipping (drop shipping of eco-friendly products) is sustainable whereas others believe just like any other business, some amount of effort needs to be put into drop shipping to make it sustainable. So, how can you make drop shipping sustainable?
- Try Green Drop Shipping. This is essentially drop shipping of eco-friendly products, which mean the packaging, processes and anything else involved in the process is sustainable and eco friendly.
- Offsetting carbon footprints, planting trees and contributing to organizations that work towards taking care of the environment are other ways of making drop shipping more sustainable.
Drop Shipping in India
Drop Shipping has a lot of advantages. There’s a very low investment cost. At the same time, there’s no direct delivery cost. There’s no need to have a storage facility or employees. Owing to these factors, drop shipping is a very popular form of business in India. Essentially, because of this, Indians contribute to a lot of the backend production. Although this seems like there would be a large amount of wastage, there isn’t as much as you’d think. Basically, if all Indian drop shippers were to open or set up retail stores, then they would have to store products in said stores. This would require them to have large sums of money and space. In this case, if any product did not sell as much as anticipated, it would lead to much more wastage than drop shipping does. In the case of drop shipping, only suppliers have finished products based on how much they get manufactured. The drop shippers place orders as and when needed, essentially leading to a lower wastage.
What industries fall under the drop shipping category?
Clothing: Since clothes are purchased based on sizes and designs in most cases, they can easily be drop shipped. All one would have to do would be to pick their size and pattern, make the payment and the product would be delivered.
Homeware and Kitchenware: Homeware and Kitchenware are usually examined for quality in person. However, with drop shipping, these products may be sold if they belong to a reputed brand. For example, if I have already purchased from Irida Naturals before, I would have no hesitation repurchasing from a drop shipping channel.
Hobby related products: People love hobbies with a passion. Hobbies are essentially a break from the monotony of regular life stuff. So, hobby-related products are found in abundance in drop shipping channels.
So, there you have it folks! A 101 on drop shipping. Let us know what you purchase from drop shipping channels on a regular basis.