DROP SHIPPING...WHEN IS IT A GOOD IDEA?

THE BASICS OF DROP SHIPPING...

It’s a simple concept...dropshipping means that you build your website and sell products that you will never need to store, purchase in bulk to get discounts and box up to ship to your customers nor deal with any returns. Every time your website gets an order, the notification is sent straight to your third part supplier and the send out the product and bill you at a price that you have been able to mark up and make a profit on...

It sounds like nirvana.

If you can find a supplier who is able to handle your fullfilment then all you need to do is concentrate on maximising the effectiveness of your website to reach your prospective audience and convince them to purchase your products. You basically become a marketing company, divesting all the production and fullfilment to third parties, just focusing promoting your products and managing your brand. You can do this from a beach in Thailand!!!!

PRO’S
  1. You don’t need to hold any stock.
  2. You don’t need to spend time or money shipping to your customers.
  3. You don’t need to deal with returns.
  4. Frees up short term cashflow for promotion.
CON’S
  1. You lose the direct relationship with your customer and this can be a risk.
  2. Unlikely you will not get the best unit rate in the early stages.
  3. Product quality and service performance is divested to a third party and you lose some control.

There are many companies out there doing millions in sales a monakes a lot of hard work and dedication to grow it. 8/10 businesses fail in the first year or so, and only 3% last longer than 5 years.

HOW SHIRTWORKS CAN HELP YOU

One of the issues you will need to face when dealing with garment decorators is the price they will need to charge for producing low volume orders on demand.

is that it is not a quick process to decorate garments, there is a varying degree of ‘setup’ time required before you can even get a garment on the ‘press’.

This time has to get factored into the production costs and passed onto you as part of the unit price.

This means low volume, made on demand, drop shipping arrangements do not offer a great unit price and you may struggle to make a margin.

If your designs can be digitally printed then Shirtworks may be able to offer you a 3 day turnaround on single items produced and shipped directly to your customers.

Alternatively we have a ‘STOCK FULLFILLMENT’ option.

TWO SOLUTIONS

1 PRODUCED TO ORDER FULLFILLMENT. (PTOF)

Single items digitally printed and shipped directly to your customer. You pay a higher unit price but you do not have to take the risk on stock holding and sink cashflow into products you have no guarantee of selling.

2 STOCK FULLFILLMENT. (SF)

This method provides you with a better margin on each product sold. The idea is that you take advantage of the price breaks to get a cheaper unit price. It does mean that you will need to do some accurate forecasting to predict sales and this is a risk which will tie up capital until the products are sold. if you get it right, your profits will be healthier than option 1.

FIRST THINGS FIRST

  • .........................................................................Do some product research
  • .....................................Talk to Shirtworks about what is possible
  • ..............................................Decide if you want PTOF or SF
  • .........................................Get some samples printed
  • ..Get them photographed and on your website
  • .......Get the orders sent to Shirtworks