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What is Wholesale Dropshipping?
Wholesale drop shipping is a number of good things, and a few not-so-good, but with comprehensive research on your part, it can a great way to start an online store for less than a boatload of money.
In essence, wholesale drop shipping is a retail practice which closes the distance between a manufactured product's source and its end user, the consumer. It does away with layers of middlemen and warehouses. And it is a tried and true business approach with several decades of use to back up that claim.
With the advent of just-in-time inventory control, wherein an assembly plant has needed components arriving on-site when they are needed rather being stockpiled as in-house inventory, wholesale drop shipping shields a small, or large, retailer from the burden of up-front costs of acquiring and storing inventory. Wholesale drop shipping allows a retailer to test the salability of new products without a major investment. It also allows a retailer to offer a wide range of products within the niche market it operates. This is possible because the retailer doesn't buy the product until after the consumer, has paid for it.
Starting from the end of a sales transaction, a customer receiving a product he has purchased, and working backward to the beginning, it goes like this:
- In a timely manner, a box filled with the customer's desired item arrives at his home via a package delivery service. The item is exactly what has been ordered. It is in excellent condition. The box it arrives in should have, as the retailer, your online store name on the shipping label. It is possible it may have no identifying information regarding who shipped it. It could have the name of the drop ship wholesaler who packed and shipped the box. And in a less-than-perfect situation, it might have a middleman's company name on the label, if you, as the retailer, didn't adequately do your homework before using wholesale drop shipping as a means of delivering something you sold to your customer.
- Possibly the manufacturer, but more likely a wholesaler who handles the product in question, has packed and shipped just this one item to the address of your customer, that is "drop shipped" it directly from their warehouse without you, the retailer, having ever been in possession of the item.
- The wholesale drop shipper prepares the item for shipping because it has received an order from you, the retailer, with whom it has a on-going business agreement. After receiving payment for the product from your customer, you placed the order with the drop shipper. The drop shipper in turn either bills the credit card you have on record with them, or offers you 30-day net terms for payment.
- Moving further back in time, the customer, browsing your online store, has seen the object of his desire, which you have offered for sale, based on your knowledge of its availability from the wholesaler or manufacturer.
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