Dropshippers Research Paper

745 Words3 Pages
Dropshippers are suppliers who will ship your orders to a third-party address. If you use dropshipping for your e-commerce business, then the third-party address is the customer who placed the order on your e-commerce site. Most dropshippers will use your labeling rather than their own on their shipments so that your customers only see your brand on the packages.

Many e-commerce entrepreneurs rely exclusively on dropshippers so that they don't take on the risks and expenses of buying, storing, and shipping inventory. Without physical inventory to worry about, the e-commerce entrepreneur's main concerns are marketing, website conversion, and customer service. When they get an order from a customer with the payment, they place an order with
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Depending on the products you're selling, you could add value by providing additional information that clears up customer confusion about using the products, or by providing information on ways of getting better usage from your products. However, not all products are amenable to this. The way out of this dilemma of dropshipping vs carrying your own inventory is understanding how to use both to your advantage.

Use Dropshipping to Learn Which Products Are the Most Lucrative

Having your own inventory allows you to buy products from suppliers at bulk rates. This allows you to profitably out compete your competitors on pricing. Alternatively, you can sell at the same prices but with a substantially larger margin. However, investing money in inventory is risky if you're unsure of its profitability. A poor selling product will leave you stuck with inventory that you can't get rid of without suffering a loss.

If you have no experience selling a product, then it makes sense to test it by using dropshipping. If it doesn't sell, nothing is lost. On the other hand, if it proves itself with consistent sales, it's time to look for a supplier with good bulk rate pricing. Continue using this strategy for identifying profitable
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