Drop Shipping is a very common term being excessively used in the online market place and is a familiar term to online retailers and wholesalers. Drop shipping introduces a concept of stock free or inventory free business where retailers can sell goods online without even stocking them. These days about 33 percent of the total E-Commerce industry relies on drop shipping for their online businesses and as a tool to manage their inventory primarily. The concept of drop shipping is ideal for small medium businesses as they don’t have to spend loads of amount to manage and stock inventory as a result the investment level is low in order to start the business from scratch.
Drop Shipping with Ali Express
Ali Express is an extension of Ali Baba and was launched to accommodate drop shippers who want to purchase items directly from Ali Express and get these items delivered to their customers right away instead of stocking them. In short, we can say that Ali Baba carter the needs of wholesalers whereas Ali Express addresses the E-Commerce business model for drop shipping. Ali Express let you purchase single items for personal use as well.
Ali Express uses a typical drop shipping model where you can simply search the products that you want to sell to your customers and come up with thousands of choices and when you find an item you want to sell to your customer, you can simply import the item from Ali Express resell this item to your customer with your own profit markups. The one thing you must have to take care about is to sync the product information, photos, and description from Ali Express on your own website or E-Commerce channel. Keep your E-Commerce channel updated as prices and stock level at Ali Express varies on a daily basis. Once you have received an order from the customer simply go to Ali Express order the product and ship it directly to your customer. Ali Express gives you much time to focus on your marketing strategies which is the most crucial aspect of running an online business. There is an enormous range of products available at Ali Express to choose from as there are largest wholesale directories offering more than 1,500,000 products in different categories and you simply need to place and order with the wholesale supplier after receiving orders from the retail customer and let the Ali Express deliver the order at the doorstep of the customer.
Payment Gateway in Pakistan
In countries like Pakistan the hardest part in establishing drop shopping is managing a payment gateway for the entire process. For such E-Commerce businesses around the globe PayPal is used, however ,it is unavailable in Pakistan. Payoneer is another option which also works with Ali Express. There are other a number of other options provided by Ali Express for Pakistan, including VISA, Master Card, Western Union, Safety Pay, Bank Transfer, Bank Wire, Web Money and many others are also available. Ali Express offers free shipping on a number of items and most of the free shippings to Pakistan are done through Singapore Post. Estimated delivery for the free posts ranges from 33 to 51 days and other options of mailing and delivery include China Post Air Mail, Ali Express Standard Shipping, Post NL, Hong Kong Post Air Mail, Ali Express Premium, EMS and DHL.
Advantages of Drop Shipping
There are a number of advantages and benefits associated with drop shipping such as while dealing with a drop shipping business you can control your own margins and can tag your own price without bothering about MSRP that is suggested retail price. There is no need to maintain a physical inventory on hand to deal with bulk orders as this would be done by the wholesalers at their end. There is no need to worry about high start up investment and deciding a particular product to sell as you can place multiple products under different categories on your website with the help of drop shipping concept. You can always test new product ideas with drop shipping and can be flexible with the customer as you don’t have to be worried about inventory and product management. Drop shipping let you enjoy a wide market range as you can simply sell your product in a number of different markets enjoying a distant outreach.
Disadvantages of Drop Shipping
There are certain complexities involved with drop shipping and one of the most important thing is to find reputable and trustworthy wholesale suppliers. One of the biggest disadvantages of drop shipping is that the major part of the business involving the product delivery is dealt by the supplier and you are simply unaware if something goes wrong in this phase of shopping. There is no way you can check the quality of products unless and until customers provides you the feedback of purchased product. If you are working with several drop shipping companies at the same time this may lead to high shipping costs and delay in deliveries due to confusion. When you are involved in a drop shipping business you are the sole responsible for each and every error at the behalf of a supplier such as lack of products in the stock, quality issues, or delay in delivery.
What is Drop Shipping?
Drop Shipping can be easily explained with the help of an example where a retail merchant post a product on his or her website and customer places the order on a retailer’s website where as the retailer in turn place order with the wholesale supplier of the product who sends the same product to the address provided by the retailer. For example a you are a retailer and saw a website selling digital camera in $200 with delivery charges. You upload the digital camera picture and specifications on your website with a price tag of $300. A customer visits your website and finds it as a great offer and places the order of digital camera on your website. You after receiving the order from the customer place your order with the supplier and provide the shipping address of your customer and hence earn straight $100 out of this deal. There are wholesalers offering branded packaging of the product you have ordered so your customer will never know that you actually drop shipped the product at their doorstep. In most of the cases the wholesalers in the case of drop shipping remains anonymous and sends the invoice number and the tracking number to the retailer after placing the order.
The Basic Drop Shipping Model
There are three simple steps in a basic drop shipping model and these steps can be listed as below:-
- In the first step the customer places and order at your website and pays you the retail price of the product at your online store
- You place the order at wholesaler or supplier website and pay the wholesale price
- You keep the profit with you that is the difference between the retail price and the wholesale price
- Supplier ships the product directly to your customer at the name and address provided by you