The internet has brought us many new possibilities resulting in millions of new online business models. Despite being around for a while now, e-commerce is still evolving as new technology comes along. Drop shipping, for example, is a powerful tool for many who want to grow their business online.
This model is an alternative to typical e-commerce businesses and/or physical stores, and it’s ideal for those that wish to make more money, but don’t have the budget or space for a retail or warehouse facility. If you own a small repair shop, or you fix devices on the side, chances are you don’t have much space (or any) to sell other products such as accessories or pre-owned devices.
It’s fine if you want to focus your business on the repair side only, but you might be missing out on the chance to make significant extra revenue and therefore take your business to the next level. If you’d like to look for new ways of bringing in revenue, but you don’t have the infrastructure to do so, drop shipping might be the solution to your problem.
What is Drop Shipping?
Drop shipping is a business model where inventory and shipping are done by a third party vendor. It’s a partnership between two companies: the online store that receives the orders and the partner vendor that will ship the product to the client on behalf of the customer-facing online store responsible for the sale.
Your profit as the customer-facing store consists of the difference between the price paid by your customer and the one charged by the vendor. All this can be done without the need to stock inventory or manipulate the product in any way. You are the orchestrating the transaction, and that’s it.
It’s safe to say this type of business offers an excellent cost-benefit advantage over an online store or even a physical store that doesn’t hold enough space for inventory or displayed products. It’s also a great opportunity to make extra money if you can’t invest in products and shipping costs.
How Does it Work?
Websites such as eBay have popularized drop shipping over the years, but these days, vendors from China such as AliExpress and Deal Extreme have taken the process to the next level due to their competitive prices, and low taxes and fees.
Let’s paint a picture of two possible scenarios for your repair business:
- If You Don’t Have a Repair Shop
Let’s say you fix phones on the side and all you have is a Facebook Page and a simple website. In this case, you can create an online store inside your website where you will display all the products you sell. When the client shops on your online store and purchases a product, you receive the payment, subtract your profit, and then purchase it from your vendor. The vendor will then process the order and ship it directly to the client who purchased from you.
- If You Own a Small Repair Shop
In this case, you do have a repair store but there isn’t enough space to stock and display inventory and/or you don’t have the capital to invest in it. A solution would be having a digital display to showcase your products such as iPads, where customers can shop through and purchase while in your store and have them delivered later. It works exactly like the online process, expect this way you can convince them to purchase something while they are already doing business with you in your store. It’s a great way to upsell.
Investment & Costs
You won’t need significant investment in inventory or infrastructure to start dropshipping, because you won’t be physically dealing with the products that will be delivered. Your store’s responsibility is simply to make the sale itself, and your goal is to make sure sales continue to grow.
The fixed costs for an e-commerce/drop shipping business coupled are very low. You can run everything from your computer at very low costs using little more than an e-commerce platform to sell your items. Shopify or WooCommerce are great options to explore for this. As the business grows, so will your expenses, but they’ll still be much smaller than traditional business models.
With drop shipping, you can operate your business from anywhere as long as you have an internet connection. Additionally, this technique allows your shop to get to more consumers beyond your local area – there are no physical limits when it comes to online sales!
You can also offer a higher range of products: multiple phone cases, headphones, USB cords, tempered glass, computer accessories, and whatever else you might think of. Since you don’t own any inventory, you can run multiple tests to see what resonates best with your customers.
Another great advantage is the possibility of scaling without any significant investment. If you get one or ten orders, you’ll have just about the same amount of work, since you’re not responsible for the operations side of the business.
For these reasons, drop shipping may be the simple solution you were looking for to grow your revenue beyond the repair business If you wish to double or triple your sales, all you need to do is find the right vendors with an operating system that fits your demands. This way, you can make more profits and start thinking of new ways to finally expand your business.