Drop shipping is the name of a business model that involves purchasing products directly from a vendor and then having them shipped directly to your customers.
Instead of purchasing a huge inventory of products, storing them, and hoping you sell them, you can use a virtual inventory. You create your own website and list products you want to sell. To make a profit, mark up the prices so they are more expensive than the prices that you will pay. Finally, wait for customers to purchase your items. When this happens, go to the website where you found the product, order it, and ship it to the customer.
The Benefits of Drop Shipping
You might be asking yourself, “Why should I consider drop shipping as a business model?” To answer this question, you should look at the benefits involved.
First, there is a very low capital requirement. You do not need to invest hundreds or thousands of dollars in inventory. In fact, you do not have to invest anything in inventory until you have a customer. This opens the door to invest in other things that will help your business, such as web content management system software like SkuVault offers.
Next, you have a wide product selection, which is a feature of this business model. Drop shipping allows you to buy your products from just about anywhere. Amazon, eBay, and Wal-Mart are three websites popularly used by drop shippers to make some quick profits.
Finally, there is a very small risk that a product might go out of stock or change dramatically without your knowledge. If this happens, you do not want a customer to purchase the product before you can delist the product or change the price.
How to Deal with Virtual Inventory Problems
Eliminating physical inventory eliminates a lot of problems. There are, however, obstacles you have to overcome when dealing with a virtual inventory. Implementing a web content management system (such as SkuVault’s system) for your inventory will make everything much easier to manage.
There are a plethora of reasons why implementing SkuVault’s web content management system is beneficial to the owner of a drop shipping business. If you happen to be the owner of a drop shipping business, take a closer look at its benefits.
Here are several reasons why implementing this type of system would be a good idea:
Access Your Content from Anywhere
Imagine being across the country and finding out one of your top selling products has gone out of stock or dramatically changed in price. You are out of town for a few more weeks, and there is nothing you can do to pull the listing or adjust the price! This is not a problem when you have SkuVault’s content management system web application. This software gives you the power to update your available quantities from anywhere in the world. All you need is your login information, and you are ready to go.
Maintain Your Products' Quantities with Ease and Accuracy
Maintaining accurate information regarding your virtual inventory is vital in order to make sure the listings on your website are accurate.
On a listing you can see the following items:
- Product Specifications
- Product Photos
The key to making sure your business is a success is making sure you keep tabs on the products you are listing. This means you need to know if the prices change or if something goes out of stock.
With the help of the best web content management system, you will have no trouble keeping your listings accurate and profitable. You can use the web content management system reporting features to make sure you are profiting as much as possible with your drop shipping business.
Put More Money Back in Your Pocket
Imagine having to hire one (or several) people to keep track of your virtual inventory for your drop shipping business. With your new content management system from SkuVault, you can keep track of your inventory on your own. This means you can cut back on the hired help.
You are also going to be putting more money into your pocket by keeping better tabs on the prices of the products in your inventory. You can maximize your profits and minimize your losses with one simple piece of software.
What Type of Profit Margins Can You Expect?
The amount of your profit margins will depend on the types of products you decide to sell. For more expensive products, you should expect a very small profit margin of somewhere between 5 and 10 percent. For a lower priced items, you can expect much larger margins.
Your final profit margin for a product is going to depend on how much you sell your products for. What it really comes down to is how quickly do you want to sell your products. If you do not want to have the products listed for very long, you are going to have to sell them for a much smaller profit.
Implementing a web content management system, such as SkuVault’s warehouse management system, is about making an investment in your drop shipping business. It is about investing in software that will make your business more profitable and more successful. Drop shipping can be a way to make a little extra money or a way to fully support your family. It all depends on how you use the web based inventory system you implement. Turn to SkuVault to enhance your business today! Click below to try a free demo.