What Is Drop Shipping & How Does It Work In 2023?

Drop shipping is a fulfillment model that allows merchants to sell products to their customers without actually stocking the products themselves. Instead, when a customer places an order, the merchant passes the order and customer information along to a wholesaler or manufacturer, who then ships the product directly to the customer. The merchant never handles the product and instead focuses on marketing and selling the product.

There are several benefits to using drop shipping as a fulfillment model. For one, it allows merchants to offer a wider range of products without having to invest in inventory upfront. This can be especially useful for small businesses or startups that may not have the capital to purchase and store large quantities of product. It also allows merchants to test the market for new products without committing to a large inventory purchase.

Another benefit of drop shipping is that it reduces the risk of carrying unsold inventory. With traditional fulfillment models, merchants must purchase products upfront and then hope that they are able to sell them. If a product doesn't sell, the merchant is stuck with excess inventory that they must either dispose of or try to sell at a discounted price. Drop shipping eliminates this risk because the merchant only orders a product from the supplier when they have already received an order for it from a customer.

Drop shipping also saves merchants time and money on warehouse space and logistics. Without the need to store and manage inventory, merchants can use their warehouse space for other purposes or eliminate the need for a warehouse altogether. This can greatly reduce overhead costs for the business.

One potential downside to drop shipping is that it can lead to longer shipping times for customers. Because the product is coming directly from the supplier rather than from the merchant's own warehouse, it may take longer for the customer to receive their order. This can be mitigated by choosing suppliers that are located close to the customer base or by offering expedited shipping options.

Another potential issue with drop shipping is the lack of control over the product and the customer experience. Because the merchant is not handling the product directly, they may have less control over the quality of the product and how it is packaged and shipped. It is important for merchants to carefully vet their suppliers and choose ones that have a track record of providing high-quality products and good customer service.

Despite these potential drawbacks, drop shipping can be a very effective fulfillment model for merchants, especially small businesses and startups. It allows merchants to offer a wider range of products without the upfront investment in inventory and reduces the risk of carrying unsold inventory. It can also save merchants time and money on warehouse space and logistics. However, it is important for merchants to carefully vet their suppliers and be aware of the potential for longer shipping times and less control over the product and customer experience.

Overall, drop shipping can be a valuable fulfillment option for merchants looking to expand their product offerings and reduce their overhead costs. It is important to carefully research and choose reliable suppliers, and to communicate clearly with customers about shipping times and expectations. With the right approach, drop shipping can be a successful and efficient way to sell products online.

If you would like to learn more about drop shipping in Australia check out our FREE Australian dropship training where we share with you step by step how to get started today!