Dropshipping is a sales method in which (part of) a manufacturer’s product offer is made available for online sales. Internet entrepreneurs will place these products on marketplaces (like Amazon and eBay) or sell them through their own sites. They will not buy your products in advance. Only when they have made a sale will they buy the product from you. You will then be expected to send the purchased products directly to the end customer. The end customer pays the standard retail price to the seller while the seller pays you a price slightly higher than your wholesale rates.
ADVANTAGES AND DISADVANTAGES OF DROPSHIPPING
With dropshipping, you as a producer have the opportunity to attract a large number of (smart) internet sellers to your products. Through them, you will be able to address foreign markets that would otherwise be unfeasible to target. Also, with dropshipping, you’ll fight the potential sale of cheap counterfeit products. When your products are widely available online, internet sellers and end users will easily distinguish between real and fake products. This is of great importance: the purchase and sale of fake products is detected more frequently and related penalties are increasing. Marketplaces like Amazon and eBay also started banishing internet sellers as a preventive measure.
As these internet vendors are not buying your product in advance, they may have little commitment to the sale of your products. You could consider a minimum monthly amount or an “entrance fee” to increase their commitment. With dropshipping, you will also have less control over the online brand experience of your product.
SUCCES CRITERIA DROPSHIPPINGA successful dropshipping program must fulfil various conditions:
- incoming orders must be fulfilled quickly and accurately. Large marketplaces require a track and trace code from the vendor into their systems within a business day;
- easy access to stock information for the seller. When they sell a product that is not available, that will hurt both your and their reputations.
Many producers choose to first do a pilot project with some (small) vendors. Thereafter, based on the experience gained, they scale up their efforts to numerous other (larger) vendors and refine their fulfilment processes. Many producers provide personalised packaging (with the seller’s brand) instead of a neutral packaging in their dropshipping program. Also, some producers engaged in dropshipping offer a range of options with respect to the automated data exchange.
Product groups where traditional retail typically does not have the entire collection on stock lend themselves to e-commerce and dropshipping. Envision products that are large, heavy,and are available in a wide range of colours.
THE EXPERTISE OF EMAKERS
EMAKERS help producers find the right vendors as well as set up all the associated processes. Together, we can develop an offer based on your product range and growth strategy.
We will help you determine the dropshipping price points as well as build an information and communication structure. This structure will always give your sellers the latest product descriptions and images of your current products. One way of achieving this is by providing an API to your fulfilment system in combination with a steady notification of new- and retired products.
Finally, we can also handle the fulfilment of orders received.
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