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Free Or Paid Drop-Shipping Service? - Which Drop-Shipping Service Best Suits Your Needs?

Sep 18th 2015 at 2:47 AM

Drop shipping refers to product delivery system where the seller accepts order from a customer and processes and transmits this order to a manufacturer or wholesaler who is then tasked to deliver the ordered goods directly to the customer. It is an arrangement where the seller actually poses as a middleman. As such, he takes his profit from the difference between the bulk sale price and the retail price of the goods sold.

Drop shipping provides retailers and sellers several and substantial advantages. It opens up space in the store for more practical usage; retailers do not have to maintain and track down inventories; they do not have to employ personnel tasked to track inventory and maintain the upkeep of the goods; and retailers and sellers do not also have to spend for the additional cost of warehousing, handling and transportation. These avoided costs will of course translate to more profit.

There are two (2) types of drop shippers: free and paid drop shipping services.

In free drop shipping, the drop shipper does not requirement payment of the handling and transportation cost from the seller or the customer. The seller simply informs the manufacturer that a certain number of goods have to be delivered to the customer on a certain day. The manufacturer then delivers without demanding additional payment of the transportation cost. In paid format, an organization focused on promoting online trading is established and requires payment of a certain amount of money from online retailers who then will be given an account. An example of this type of arrangement is the Salehoo wholesale drop shipping system.

Why avail of free drop ship service?

Of course, common wisdom will dictate most retailers, especially those who are just starting up with their online business, that free drop shipping method gives them more benefits since they do not have to shell out more capital to pay for the additional cost of warehousing, upkeep, handling and transportation. This is good business practice provided that the manufacturer/supplier has an established track record of competent and efficient service.

Is paid drop ship service more reliable?

Other online retail practitioners however will point to the inherent inadequacy of free drop shipping. They point to the fact that because the service is free, it is inherently inefficient. Mostly, they would argue that it is better to pay for the service in order to ensure speedy, efficient and safe delivery of the ordered goods. Also, it has been said that paid drop shippers offer a variety of goods and services than those which are free. Ultimately, it is for the online retailers to choose which drop ship mechanism to avail of. What is paramount is that the wholesale purchase will ensure them maximum profitability.

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