Aug 12, 2014
In today’s market, entrepreneurs and business owners have to find smart ways to cut costs without harming the quality and profitability of their products. Drop shipping is a fulfillment model that lets owners partner directly with wholesalers who then ship out listed items to customers. Owners are then charged for the price of the shipped item.
The Good
With a merchant account for drop shipping, you have a few distinct advantages that will save you money, time, and frustration.
- Come to Market Early. You’ll be able to start up your online business faster than the competition. With no inventory to wait on or collect.
- Less Risk. Starting an online business is made easy because you don’t have to spend hundreds or thousands of dollars on stocking your online store with inventory. That means if you don’t sell an item, you haven’t lost a penny.
- Wider Product Availability. Having a relationship with a warehouse, gives you access to a much larger inventory than you would have otherwise. Customers are able to see the full list of items within the warehouse, increasing the likelihood that your store will make a sale.
- Freedom. Because there are no warehouses to worry about, you can run your business from anywhere on the planet as long as you have internet access and a computer.
The Bad
Owners who have a merchant account for drop shipping still face a set of unique challenges.
- Order Processing Problems. You must have a good and communicative relationship with your warehouse. If not, the order process can become long and tiresome for the customer. For example, once the customer places an order, you have to ask the warehouse if the item is available, the warehouse has to check, then the warehouse has to notify you and the customer all before the product can be moved. Discuss appropriate response times with the warehouse to limit delays.
- Information Issues. All items offered must have: a written product description, shipping weight, a price, and the available inventory. Some manufacturers are slow to relay this information, so there are gaps in your inventory information. This is unprofessional and frustrating from a customer perspective.
- Shipping Problems. Having a merchant account for drop shipping allows you to work with different vendors. However, if a customer chooses different items from different vendors, you will have to cover the costs of shipping three separate items for the same person instead of paying for one shipment.
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