Drop-shipping is a form of business that allows you to list products that you don’t have but know where to find, you are kind of like the middleman who knows how to source for products and knows how to deliver it to the person who needs it, while you make a nice profit after your cost of sales.
In the product industry you have the following as the supply chain from: Product manufacture———–Wholesaler ————-Retailer ——–Consumer
Drop-shipping does not appear here because it’s a service, not a role, a drop-shipper can also be the manufacturer of a product, meaning that when you manufacture your own products and sell to the final consumer you are also drop shipping for your own products. A drop shipping merchant is that person that acts as a go-between, between the Manufacturer or Wholesaler and the final consumer.
A drop-shipping merchant, in this case, is responsible for finding the products, listing it on his site and selling to the final consumer. The manufacturer or wholesaler then ships it to the person who bought it.
HOW DROP SHIPPING WORKS
- Mr. Bon wants to purchase a new battery for his phone, he goes to Mr. Dav’s Ecommerce shop and places an order and makes a payment.
- Mr. Dav receives the order and payment and then, in turn, places an order with his suppliers which could either be the manufacturer or a wholesaler.
- When the supplier receives the order, he processes and fulfills and ships to the buyer. He then gives a tracking number to the Drop shipping Merchant who owns the eCommerce store
- The Drop-shipping merchant then informs the buyer that his order is on the way.
- When the buyer receives the goods, it’s only the logo of the drop shipping merchant he is aware of, the manufacturers or wholesaler, in this case, is invisible to him.