Drop shipping is a key component of fast-paced online retail and shipping. But not having direct control of your inventory as a retailer has its downfalls, and there are things you need in order to make sure you are successful using this new logistical method. Using freight effectively is crucial, and you need to make sure you have the right technology in place to keep track of it all.
- Retailers often tie up significant capital in purchasing inventory. Drop shipping requires less upfront investment by enabling a more on demand model.
- Since retailers aren’t actually keeping merchandise in stock, they don’t have to pay for warehouse space or oversee operations to keep items handy.
- Since retailers are shipping from outside their owned inventory, they often lose visibility into key fulfillment milestones like ship dates, delivery timeframes and shipment tracking.
“When it’s done right, drop shipping can be the perfect logistical orchestration that benefits all parties involved. However, when marred with challenges like lack of visibility into supplier inventory or complexity from managing too many different suppliers, it can result in unhappy customers or lost sales.”