Drop Shipping is a process similar to retailing, but here the retailer isn’t required to stock the goods up in bulk quantity but instead chooses to pass it on to the customer’s with an order placement in advance and the shipment details to the wholesaler or the manufacturer who then releases the good’s directly to the customer.
This process is known as Drop Shipping. There are many advantages of Drop Shipping, below are a listed few of them:
Convenient Payment Option
In drop shipping the payment option is very convenient, as the investor isn’t required to pay in advance for the products.
In this procedure the investor is enabled to display their goods over the internet which they intend to do business with.
After a customer willing to buy a product places an order over the site on the internet the investor can carry on the with the Drop Shipping procedure of delivering the specific item to the customer.
The business investor isn’t required to stock up their goods before the sales.
The investor can easily choose to buy the goods when they have the customer and order on hand with the help of advance order placement via internet.
It saves the investor from piling up the products in bulk by purchasing a warehouse to stock them up in.
The major benefit in this distribution procedure is that the investor isn’t required to purchase goods in bulk and then pile them up in a warehouse.
They can conveniently purchase the required items based on the orders.
This procedure is entirely opposite to that of Drop Shipping. In this the wholesaler needs to stock up the goods in bulk quantity much in advance and releases these goods through the distributor into the market.
On the Spot Payment
The wholesaler needs to make the payment as soon as he purchases the goods to stock them up. Regardless of the fact that if there is adequate demand in the market for the specific product or not.
This can be a little risky but then a risk is involved in no matter which business option you choose.
The wholesaler requires a warehouse to store the goods purchased in bulk, it needs to be safe and of enough space to accumulate all the goods that have been purchased in bulk quantity.
The major benefit in this form of distribution is that the payment received is also in a lump sum against the delivery of the goods.
The main reason being the wholesaler doesn’t need to supply one product after the other to each customer but through the distributor can provide the goods in bulk quantity or as per the demand in the market.
The major difference between the two distribution channels Drop Shipping and Distributor/Wholesaler are that in case of Drop Shipping it’s instant payment against delivery warehouse.
In case of the Distributor it’s when the adequate amount of sales has been made only then can they collect their respective amounts.
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