4 Reasons Why Retailers Should Consider Drop-Shipping

Shipping speed is the new battleground for retail differentiation. As a result, retailers are putting in overtime to find the right order fulfillment process to set them apart from their competitors. Ecommerce platforms such as Jet and Amazon offer customers order fulfillment at breakneck speeds, thus pushing competitive retailers to review their current shipping strategies in an effort to reduce their own shipping times. Among the ways they can do this? Drop-shipping.

Drop-shipping is one of the primary methods retailers can use to keep up with both consumer demands and retail competition. In fact, the Wall Street Journal predicted that drop-shipping would become mainstream and an increasing number of retailers are indeed finding that drop-shipping can help them reduce shipping times and appeal to time-conscious customers. To help explore how drop-shipping may be right for your retail business, consider the following. 

What Exactly is Drop-Shipping?

Drop-shipping is a fulfillment method where a company’s products are either shipped directly to customers from the wholesaler, or facilitated through a third party. The differentiating factor is that the inventory being sold goes straight from the manufacturer to the consumer without ever being housed inside the seller’s physical store or warehouse. The benefits of drop-shipping are vast, including reduced shipping errors, real-time product updates and more. To identify additional reasons why drop-shipping can be a healthy business strategy for retailers, review the below.  

Reason #1: Drop-Shipping Welcomes Less Time Intense Details

Traditionally, retailers have to invest in a physical store or warehouse before they can get their store up and running. Drop-shipping, on the other hand, enables businesses to build their offerings from the ground up by only paying for products once they make a sale and are paid by the customer. In addition to reducing overhead, drop-shipping takes less time for merchants to accept and handle since the drop-shipper tracks inventory, product handling and shipping – as well as potential product returns. These collective steps help to reduce a merchant’s day-to-day operations while also saving them time. 

Reason #2: Drop-Shipping Welcomes Reduced Shipping Errors

When a retailer drop-ships a product it goes straight from the supplier to the customer, meaning it makes one less stop on its path to delivery. This one less stop helps reduce shipping time, which both the retailer and buyer can appreciate. It also means that less hands touch the product on its path to the customer, which reduces shipping errors. In fact, ReadyCloud reports that 33 percent of products ordered online are returned, with 65 percent of these returns due to retailer error – not customer indecisiveness. Keeping this in mind, it’s safe to say that a large percentage of customer returns are preventable and retailers can increase their margins by reducing costly shipping errors through drop-shipping.

Reason #3: Drop-Shipping Helps to Conserve Valuable Store Space

Most business owners quickly realize just how valuable floor space can be. While price per square foot of retail space varies by location, The Balance suggests that $17 per square foot is a healthy average. Drop-shipping eliminates the need for storage space, thus enabling brick and mortar retailers to save on expensive storage square footage while also giving them another avenue to increase their total business sales. Likewise, online retailers who utilize drop-shipping don’t have to rent out large warehouses to house their products. They can run their retail business from any location and communicate remotely with their customers and drop-shipping provider. This core reason alone stands out as a valuable reason to introduce drop-shipping to your business. 

Reason #4: Drop-Shipping Requires Minimal Financial Overhead

Finally, one more perk to consider as you evaluate drop-shipping is that it empowers retailers to start their own business in record time with minimal financial overhead. As a result, the risk to incorporating drop-shipping is one worth investing in when you consider your potential reward… which would be consumer sales. To further support these goals, aligning yourself with an established retail management system, which can assist in streamlining your inventory solutions into one manageable, cloud-based solution can offer you trusted support in your drop-shipping and at-large retail goals.