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
E-Commerce Business at its core can be referred to the sale and purchase of goods as well as services via electronic channels most probably the Internet. Internet can be termed as one of the wildest invention of this century and as created a boom in online sale and business industry as well. People now tend to perform all their activities on Internet and that also includes shopping. Internet has completely revolutionized the way of doing business as you can not only sell the physical products but can also sell digitized products such as videos, audios, software and services over the Internet through your proper E-Commerce Business.
In a successful and comprehensive E-Commerce Business all the transactions that involve various business and government organizations, consumers and financial organizations are done online via Internet. The concept of E-Commerce has evolved over the years and with the advent of technology related to smart phones online business has become more popular and mobile commerce has created its own independent market. Social Media is also a great driver of E-Commerce Business as Face Book drives 85 percent of sales on the E-Commerce platform of giants like Shopify.
Pakistan is also included as one of those countries where the percentage of Internet and smart phones users is leveraging with each passing day. However the size of E-Commerce in Pakistan is considerably small but with the advancement in technology and building of trusting among the business and consumer it is expected that soon there will be realization of the full potential of E-Commerce Business in Pakistan as there are number of advantages associated with the E-Commerce Business such as there are no geographical barriers as it comes in an open structure, the cost of transaction is also very low in E-Commerce businesses and there are very limited barriers associated with the entry in the world of E-Commerce Business.
In the current scenario there are number of factors that are hampering the growth of E-Commerce in Pakistan. These factors are explained in detail as under:-
Delusion about E-Commerce Business in Pakistan
Most of the people in Pakistan don’t have the actual concept about the E-Commerce business due to low literacy rate and non-exposure to the actual facts and figures regarding E-Commerce. Most of the people think online shopping only revolves around purchasing digitized products and the payment can be only done through the credit card. Most of the people in Pakistan don’t possess a credit card so that don’t realize that they can also purchase online physical products without having a credit card. Moreover the conventional entrepreneur of Pakistan don’t know exactly that E-Commerce Business means serving the existing customers, developing new and advanced markets and exploring new channels of distribution for the existing products.
Drop Shipping is a term used for retail business where you can setup a comprehensive retail fulfillment without keeping and maintain specific inventory and stock at hand. The basic idea behind Drop Shipping is not to spend money in maintaining inventory and when you have to sell a product you purchase it from another third party and deliver it to your customer directly. In this kind of business the merchant virtually sells the product and never physically sees or purchases the product before reselling it. It is different from the standard retail method of as merchant don’t have to maintain his own inventory. Instead the inventory or stock is purchased from the third party depending upon the orders. The products for the placed orders are purchased from the wholesalers and third party manufacturers. The concept of drop shipping is ideal for the online businesses where the merchant or seller can’t maintain a physical warehouse or an inventory.
There are number of benefits and advantages associated with the drop shipping such in order to launch a business with the concept of drop shipping you need less capital as compared to a business that uses standard retail and inventory approach. You don’t have to invest thousands in maintaining and keeping the stock as in drop shipping you usually purchase a product after you have generated a sale and are being paid by the customer first. So in short we can say that in order to start a drop shipping business you need a very little money o invest and no major inventory you front investments. Basically drop shipping is an extended form of E-Commerce and is very easy to manage as you don’t have to deal with the physical products. There is no need of marinating and paying for a warehouse, there is no worries how to package and ship your order as well as you don’t have to worry about tracking the inventory and managing the accounts of inventory. There is no worries regarding items to be handled and also worries about the inbound shipments as well as you don’t have to worry about ordering new products for the inventory to keep the stock at a specific level.
Drop shipping results in low overhead cost as you don’t have to purchase the inventory beforehand that means you overhead expenses are quite low. You can simply run your drop shipping business directly from home from your laptop as it let you operate from a flexible location. The only thing you have to do properly is to run an effective communication with your customers and suppliers and rest is done very easily. Drop shipping also let you offer a wide range of products to your customers as you don’t have to purchase products prior to the sales so you can present a huge selection in front of your customers so that they can select from the selection. The Drop shipping business is also very easy to scale as you can simply leverage the suppliers and most of the work in processing the order is done by the suppliers. All these plus points make drop shipping a very attractive option for both the beginners and advanced E Commerce businessmen.
Scope of Drop Shipping in Pakistan
Pakistan is already experiencing boom in the usage of internet and online shopping. With each passing day people are becoming more and more prone towards E-Shopping and E-Commerce. However there are a few obstacles associated with the concept of drop shipping in Pakistan and one of the biggest concerns is that most of the foreign companies do not ship their items and products to Pakistan. Most of