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The Process of Drop Shipping – A Profitable Business Model?

An exploration into the business of drop shipping is needed to explore the profitability

of it’s business model. This is an important process before considering implementation

into your own distribution and operation center.

Also,  if you are looking to sell or buy an ecommerce

business with drop shipping as their model,

it’s always a good idea to understand it’s process

before going into broker business negotiations.

 

E commerce Business Model?

The business model falls under the ecommerce business industry,

one that is popular for increasing overall customer experiences.

This is achieved by streamlining the product distribution process,

for faster and more efficient delivery.

This is an important component in the overall business profitability scale,

since product distribution is based on distribution efficiency.

Some of the products that are included in this conversation, are as followed:

 

 

• Software Intangible Products
• Hardware Tangible Products
• Goods, transfer and service

 

 

 

 

Business Model Process of Drop Shipping

The process of this business model is, a popular method for

ecommerce business transactions.

This is because of its simplicity and ease of use.

This is for both the consumer or online shopper,

as well as the online merchant or business establishment.

 

 

Case Study of Drop Shopping and Ecommerce Business Model?

Case examples, can help to provide a better overview of the

entire process in a working format.

The empirical electronic trail, can help new and seasoned business investors,

approach the right business model for their

ecommerce business needs, on and off the field.

So, without further ado, let’s look at a case example for a clearer outline

and business approach to buying or selling ecommerce websites.

 

 

Drop Shipping Statistical Side?

This is a great case study analysis on drop shipping for ecommerce business models.

Why you ask?

Because, in this example it shows how drop shipping’s effective rate was

from the year 2007, at the time when

drop shipping was utilized for this business model.

This process is then examined and compared until today’s current perspective,

some eleven years later, in 2018!

This case study from eCommerce fuel, sheds light onto the

main factors for choosing drop shipping.

 

 

These reasons which were included back in in 2007, are as followed:

 

 

• A business plan and operation that would offer low risk to reward ratio

 

• A business venture that offered little capital or start up fees

 

• Be scale-able, no matter size or volume.

 

• Location and geo targeting, remote login and remote connection

 

 

Now, the above reasons for deciding on selling or buying a drop shipping business

model for an ecommerce website, still hold true today.

 

 

Building Process of Drop Shipping – 2018

However, the process of building a meaningful drop shipping ecommerce business,

that generates real wealth, through real online methods,

may not work as successfully in present day, 2018.

 

 

The Ecommerce Business Landscape in 2018

This business foundation and model for ecommerce has changed and evolved

over the years, especially over the last decade.

This is because, the competition pool levels have increased drastically, from 2007 to 2018.

According to ecommerce business statistical information,

this new and trending phenomenon

of more and more businesses, entering this arena,

industry and online marketplace,

has changed the playing field forever.

 

 

 

The Amazon Generation of Ecommerce Business

This new competition pool of ecommerce and drop shipping,

has been overtaken by the world of Amazon.

According to case studies, Amazon and eBay are the

great 2 Giants of the ecommerce world.

Keep in mind however, that you do

not need to dropship as a seller to participate in the online marketplace.

However, since Amazon participates in this process more than eBay,

their business practice is growing at a much faster rate.

 

 

Distribution Comparison Channel

So, if you look at the comparison between Amazon and eBay,

just from a distribution

and online drop shipping process, Amazon rises above all the major competition.

Not only is Amazon a leader in this forum

of business models in the eCommerce world,

it has also shown how effective it’s use can be if incorporated

correctly within the online website.

eBay has taken a backseat to Amazon in this drop shipping race, if one should exist.

There are different channels and options in deciding the best possible

distribution process to your ecommerce website.

 

 

Case Study Success – Ecommerce Integration of Drop Shipping

Amazon, and other online powerhouses of drop shipping

in the eCommerce trade of businesses,

understand the online market place of their buying clients.

This is helpful, since so many business dynamics exist

within the business interaction and process stage.

The ecommerce business alone, has transitioned many consumers,

into online and active buying participants of a drop shipping business.

 

 

Drop Shipping – Consumer End?

The consumer however, may not understand the process of drop shipping,

but if the delivery and execution of the product is provided in an efficient manner,

the consumer to business relationship, is intact.

However, any misfortunes or misgivings, can alter this

balanced business model between consumer transactions online.

Meaning, if the customers expectations are not met through

the ecommerce sites of doing drop shipping,

then the online business may face a decrease in

online conversions and other business-related success.

 

 

Drop Selling According to the Major Players

This process of selling business goods through the form of drop shipping,

can be accomplished and be successful as mentioned in

earlier examples, for new business ventures.

The only downfall is the increased competition levels, due to all the hype in

ecommerce business increasing in sales, both

with the online consumer marketplace, and the selling of an online business.

This is because, with an increased competition level of new businesses,

either buying or building, into this niche market,

the selling of other individuals products becomes more difficult.

As you can imagine, the selling of one’s goods can

be a challenge for a business owner or investor,

but this challenge only increases when these products are from a 3^rd party source.

 

 

Winners Circle of Drop Shipping Success

So, if it has become more difficult to launch a successful

drop shipping ecommerce business model.

So, what can you do to compete in this online marketplace?

 

 

Solutions for Ecommerce Competition of Drop Shipping

There are positive ways to overcome the increasing competition in the

business pool of drop shipping and ecommerce business types.

 

Some of these solutions are as followed:

 

• offering a large amount of informational value to your products and business.

 

• sell higher margin products and accessories than your competition.

 

• as a supplement to your shopping catalog.

 

 

 

 

 

 

 

Expectations of Profit Margins for Drop Shipping?

This is the bottom line for most business owners, regardless if online,

or if is a physical retail location.

So, looking at a drop shipping business, the profit margins,

depend greatly on the actual products you or your business sell.

Let’s say you have an electronic software business online

and sell electronics to your consumers.

The profit margins are thin in this case, and will likely go in this direction,

from the 5 to 10 percent range.

 

The business of drop shipping margins is

normally between the 10 and 15 percent range.

This will help in determining how you will

set up your drop shipping business,

once acquired or built.

 

 

Where do you sell Drop Shipped Products, Anyways?

This is important to understand, since this is the assembly line for transporting goods.

Goods and products, that your online consumer base is

waiting and depending on, once ordered.

So, to answer the question, where do people sell drop shipped products,

is to, look around online first.

You may have already used a drop ship company and system, without even knowing it.

This is because, many people now, in 2018,

can sell their products from anywhere in the world, per se.

This means, about anywhere will do to set up shop and business operation.

Remember, the location freedom to do business,

and remote use of doing online business is on your side.

This is because, many of the products do not require a physical location for data and product storage.

 

 

 

 

Product Sales for Drop Shipping Business

Many of these products or good for sale, will come from large giants like eBay and Amazon.

This is because, these two entities for example, use fulfillment through drop shippers.

Today, thousands of eCommerce sites, use these online giants,

to push their products to the online marketplace.

 

What is a Hybrid Business Model?

There are more examples of ecommerce businesses that use a myriad of different means.

Some of these means can be a hybrid or collection of both, that is

drop shipping and some other form of distribution use.

This is because, not all products are valued in the same method or process, as other products.

For example, Home Depot, uses the drop shipping

model for less popular items they have in stock.

This is because, the point is to clear out the least popular

and effective methods for optimizing business results.

A broader product selection is the result in the above method.

This also helps to limit other product inventory,

to maintain the constant flow of business and eCommerce.

 

 

Best Solution for Your Current Business

So, when deciding on a new business venture, or to add to your existing one, creating an

actionable plan for your ecommerce site is the

best foundation move to this process.

 

This will help you improve your:

• business scale-ability,
• profitability,
• and long-term business success.

 

 

Channel Overview

So, now that you have a good understanding of the simplest from of ecommerce

on the online marketplace, keep a close eye on your shipper.

This will help you integrate your store front efforts with

your online website traffic and online inventory.

 

However, there are areas you need to keep tabs on when looking at e commerce

sites to buy, or already have one in existence:

 

• Lowered Product Quality Expectations
• Problems with actual order
• Your business is in direct target, for example bad online reviews from “review sites”.

 

 

 

Drop Shipping Capabilities?

Yes, software for drop shipping does exist,

and should be considered in your business plan or strategy.

For example, there are many drop shippers that use a model

to set a quick store with online organic traffic.

This is through such software as Shopify, as an example.

 

 

What is Shopify?

According to Widipedia, shopify is a Canadian ecommerce company.

It has a main location hub in the providence of Ontario, Ottawa.

It also, is the propriety eCommerce platform for online stores, and retail point of sale systems

This company according to Wikipedia, reports more than

500 thousand merchants using this platform.

This is no surprise to learn, that over 45 billion dollars

in gross merchandise volume was totaled.

 

 

Product Models for Ecommerce

Each ecommerce business will have a different

technique or online transaction method.

These methods are for supplying their products online to consumers,

and/or other business entities.

 

These can range from the following:

 

1. Single Product
2. Single Category
3. Multiple Category
4. Affiliate
5. Hybrid

 

 

Closing Statement:

 

Drop Shipping and Future Business Potential?

This brings us to our next area of discussion,

which is ecommerce business classifications.

So, what exactly is e commerce business classification,

and why should it be important to you and your business buying or selling position?

Continue reading on, to learn more about business opportunities in ecommerce.

This will help further the informational process in revealing all the profit potential in this new marketplace.