Drop shipping is a unique concept in supply chain management. The concept is mostly adopted by wholesalers cum manufacturers who use online medium to function their businesses.In this process, the online retailer does not maintain any inventory of his own nor does he ships the products to his customers by himself. Here, the inventory and order shipment is directly handled by the wholesaler or the manufacturer.We at Indies, have a client, who has
a family business of manufacturing belt and buckles. Our client owns an online retail and wholesale store in addition to their bricks and mortar located in Florida USA. Indies has developed and is maintaining their online wholesale and retail web-stores.
After having a few years of business relation with our client, Indies recommended them to incorporate the concept of online Drop Shipping to leverage their wholesale business. Our client is now able to sell their products via new online retailers channel formed using web solution provided by us.
Drop Shipping Terminologies
Drop-shipper: Normally, the manufacturer or the wholesaler acts as a drop-shipper. In this case, our client is the drop-shipper.
Indies: Indies is a software company that has integrated a web solution for drop shipping in the client’s wholesale web-store.
Online retailers: Retailers formed via online drop shipping solution which is offered by Indies to its client’s.
Customers: These are people who buy products from the retailer’s web-store.
Step 1: The customers visit the retailer’s web-store. They buy the products on retail price from retailer’s web-store.
Step 2: The retailer then transfers the order and shipping details of his customers to the drop-shipper and pays the wholesale price for the same.
Step 3: After receiving the details from the retailer the drop-shipper processes the order and ship products to the retailer’s customer.
Advantage of Drop shipping
- Retailers are freed from the need to find and maintain a warehouse. As a result no cost is incurred for inventory maintenance. As mention earlier inventory is directly maintained by the drop-shipper.
- Retailers have to pay for only those products that get sold on their web-store hence no dead stock creation.
- Every week new products suggestion is offered to retailers by the drop-shipper
- Retailers business is not liable for any shipping and packaging expenses as these areas are handled by the drop-shipper himself.
- Retailers enjoy the facility of private label shipping offered by the drop-shipper
- Drop-shipper enjoys a whole new channel of customers created through their online retailers
- Additional profit is generated by offering their retailers the development and maintenance of individual web-stores.
- His traditional online retail and wholesale profits aren’t affected by incorporating this new revenue generation channel. Moreover, there are fair chances that his conventional revenue channels get benefited by including this new service.
Technicalities developed in client’s drop shipping store-front
Indies workforce implemented the following functionalities
- Creation of online web-store-front that clearly sells client’s drop shipping concept. Integration of store-front with the drop-shipper’s online wholesale store.
- Registration facility provided for people who want to get themselves converted into online retailers.
- Registered retailers can buy web-store creation services.
- Through it, the retailers can create their own web-stores that have 2000+ drop-shipper’s products pre-loaded into them.
- Every week new products suggestion to sell.
- Integration of payment gateways.
- Robust customer handling mechanism.
- Private label shipping.
- Retailers web- stores databases are integrated with drop-shipper’s database.
- Clear communication call between the retailer and the drop-shipper. Here, the retailer is able to transfer the payment (wholesale price of products) and shipping details of his customers to the drop-shipper who in return informs the retailer regarding the shipping status of the customers.
4. If the retailer is not interested in setting up a web-store through the drop-shipper’s store-front then they can choose to only register for drop ship facility and commence the creation of the web-store on their own.
Concluding with figures
Without drop shipping our client were able to reach 3000 people per month through their online wholesale and retail stores.
In the initial month after integrating the concept of drop shipping in their wholesale web-store, our client registered 300(10%) retailers. These retailers were able to bring 2700(90%) customers in total through their individual web-stores. Thus, drop shipping added 100% profit to traditional revenue model.
Lastly, the client’s company achieved its objective of making more customers happy.
If you are in the same process of leveraging your retail skills online you can contact Indies for developing robust retail and wholesale e-commerce solutions.