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Starting a Business the Easy Way with Drop Shipping

Here in the UK we’ve long been a “nation of shopkeepers” and despite the advances in technology that have resulted in many small high street businesses struggling, we still are.  However, many of our small businesses have now moved online, whether just by adding an e-commerce website as an extra outlet for their products or by abandoning bricks and mortar premises and taking the whole business into the ether, solely trading online.  For small retail outlets that are struggling in this uncertain economic climate, adding a second business is a tempting way of increasing revenue, especially if the second business operates only online.  However, many small business owners (and would-be business owners) may find it challenging to raise the initial funding necessary to open a new line of business.  This is where drop shipping can come to the rescue as it requires less initial funding and allows the business owner to expand at a rate that is convenient for them.

The drop shipping business model entails buying goods from a third party (usually a wholesaler or manufacturer) and having the goods shipped directly to your customer, negating the need for storage premises to hold the inventory or the need to handle goods in order to fulfil customer orders.  There are several benefits to drop shipping as a business model:

  • Low Start-up Costs – No need to invest in stock or inventory as you only have to purchase the product once you’ve made a sale and the customer has paid for the goods.  This makes it easy to avoid accumulating business debts or any type.
  • Easy to Start – with no need for premises, stock management, order packaging, etc., you won’t encounter the expenses and overheads that are necessary to start a traditional business.  A drop shipping business can be started from home as a one-person business as long as you have a laptop and an internet connection.  The initial steps are as follows:
    • Choose the products you wish to sell
    • Find a supplier that sells the products
    • Negotiate terms with the supplier
    • List the products on a store or marketplace such as Amazon, Wayfair, Shopify – there are several online outlets where you can list your products for a small fee per sale.
  • Flexibility – you can sell so many types of products using the drop shipping model that the world really is your oyster.  Because there is no need to pre-purchase products you can add to your product offerings or change them completely to suit your business needs and to suit the market.
  • Rapid Business Growth – if you create a good business relationship with your suppliers and you want to scale up and increase your income it’s easy to do so as the supplier manages most of the work involved in processing the orders.  Obviously, the more orders you get, the more you’ll need to communicate with customers, but this will be purely administrative work.  The business responsibilities are few compared with a traditional retailer and it’s pretty easy to operate a lifestyle business purely drop shipping.

Next week we’ll take a look at some of the pitfalls to look out for when operating a drop shipping business.  Why not make sure you don’t miss the information by following us on Facebook or Twitter.