When opening up an ecommerce shop, one of the major things to consider is how to supply your products. There are two main ways to do this, drop shipping and having inventory on hand. Depending on your business one may be better than the other. Take a read below and see what these options present to your business.
What is drop shipping, exactly? Well, drop shipping means that you are having your suppliers ship their products directly to your customers. This means you have no inventory. No inventory means less overhead, e.g. warehousing cost and carrying cost of inventory. With the lower overhead, you can focus on growing your business and putting that unused money elsewhere.
Drop shipping can also help your business if you are located in some remote region that is difficult or expensive to ship out of. For example, if your business is based out of Alaska, it can be extremely costly to ship products, cost that you would have to pass on to your customers. Now, if your supplier has a warehouse that is more centrally located to the majority of your clients that will save you on shipping cost that you can then pass on your customers.
Drop shipping does have some drawbacks as well. For one, it can limit your product selection. If your supplier does not carry an item then you cannot obviously offer it to your customers. Also, fulfillment costs are higher with drop shipping. You’re paying stocking, picking, packing, and shipping fees along with mark-ups on products sold this way. What this means is that as your business grows the more these costs will grow. With that being said, drop shipping would be a good option for smaller businesses where the benefits out way the costs of using this method of order fulfillment.
Keeping your products locally may also be a good idea for other businesses. This way you have complete control of your supply and know exactly what is going into your shipping and inventory cost. Also, unlike in drop shipping, the more your business grows and the more efficient that you get at shipping, the less your shipping cost will be. With holding inventory, you can stock whatever you want. So you are not limiting the products that you can offer your customers because if one supplier doesn’t have want you’re looking for, just find one that does.
With holding inventory come some challenges, however. You will need to have some type of inventory management system in place to keep track of what you have in stock and when you need to reorder. Also, it would be wise to tie in your inventory management system with your website, so that you can keep real time information as orders are coming in. Cart32 offers an advanced external script area, that will allow you to parse certain information from incoming orders to a file in which you can then use that file to integrate with your inventory management system. For holding inventory, I recommend this for bigger businesses that can manage the cost and have the sales volume to mitigate those costs.
So there you have it, a look into some ways that you can supply your budding or thriving ecommerce business. Whatever type of online business you have, Cart32 would be a great fit to get you to start or improve your online process.