Terms to Know When Starting An Online Dropship Business
What is dropshipping?
Dropshipping is a retail fulfillment method where a store or individual doesn't keep the products it sells in stock. Instead, when a store or individual sells a product using the dropshipping model, it purchases the item from a third party and that third party ships it directly to the customer on your behalf.
Here’s an example of a normal business model without a dropshipper :
- A business routinely orders products from a supplier to maintain the inventory on hand, often in Minimum Order Quantities (MOQs) to get a wholesale price
- A business stores the products until a customer orders them.
- The business processes each customer’s order, package the goods and ship them to the customer yourself.
When a dropshipper is involved, the process looks a bit different:
- A customer orders products from your business.
- You pass the order info along to your dropshipper.
- On receipt of the order, the dropshipper charges you a price for the product sold, usually wholesale plus a dropshipping fee. Then they package the goods and ship them directly to the customer. You do not need to store or package the goods yourself.
Dropshipping eliminates the need to keep inventory on hand, freeing your business from the (time, labor and monetary) costs of manufacturing or organizing products yourself and maintaining your own warehouse property to store them. Even if you only dropship some of your products, you’ll be freeing up resources for the items that need extra attention. It even allows you to offer items that would normally be impossible to ship due to your location’s limitations, like extremely large or perishable goods. You can be based anywhere in the world, and your items will still reach customers!
What is Print on Demand (POD)?
Print on demand products are essentially white label physical products you can easily drop ship. Easy right? But not so fast. While your product niche matters, you will still need a strong brand to turn sales. If you are at the point, where you feel like you have a strong niche brand, it might be time to partner with a print on demand company.
What is White Label and/or Private Label?
The terms white label and private label can be used interchangeably. White labeling is when a product or service removes their brand and logo from the end product and instead uses the branding requested by the purchaser.
What is Blind Shipping?
Blind shipping is when a shipper ships a product directly from supplier to customer, while hiding the identity of the supplier from the customer.
Double-blind shipping is when the supplier also does not know the identity of the customer– that is, they do not know who they are shipping to.
Why use blind or double-blind shipping?
Let’s say you sell customized notebooks and your supplier is in China. If your packaging contains the supplier’s information, your customer may try to place their next order directly from the supplier, circumventing you. Blind shipping means you avoid this– and keep your customers.
What if you also don’t want your supplier to reach out directly to your customers and offer them the goods you sell at better prices? That’s when double-blind shipping could be a great option for you.
What is a mockup?
In manufacturing and design, a mockup, or mock-up, is a scale or full-size model of a design or device, used for teaching, demonstration, design evaluation, promotion, and other purposes. A mockup generator is usually built into the vendors website where you are able to upload your image files. The mockup is used to determine the colors you set to use and create print files that the vendor uses to print your designs.