Understanding Cross-Border Drop Shipping Logistics And Private Label Drop Shipping
Entrepreneurship is a valuable asset in terms of creating a wealth within one’s household, community or in the entire country at large. The ability of a person to identify gaps within the market, create goods and or service to fill the gap and consequently make a profit from it is what is referred to as entrepreneurship, in conventional terms.
Based on the description above, you realize that in every entrepreneurship endeavor, a eureka moment is required; where the entrepreneur identifies what is lacking in the supply chain and in the market and uses this as the basis of his or her business.
This is exactly the same kind of description that should be accorded to the ideology of cross-border drop shipping and private label drop shipping. These are two recently developed supply management systems that are taking over the sphere of e-commerce. This kind of supply chain is also revolutionizing how people are starting and running online businesses, especially with regards to ease of starting an online business.
Traditionally, in order to start a business, one had to have the specific good or goods, a storage space to store the goods and obviously a huge amount of capital to set up the business. With the concept of drop shipping, you can forget about all of this.
Understanding Cross-Border Drop Shipping
Drop shipping is retail supply or fulfillment method where a store does not have to stock the goods they are selling in a warehouse (their own or rented). In this model the retailer simply has to make arrangement with the manufacturers or wholesalers where an agreement is made that the supply of goods can be made directly from the private label manufacturer’s or wholesaler’s warehouse by the retailer without moving having to move the goods to retailer's warehouse first. In this regard, once the retailer receives an order, the payment for the goods and the shipment information, he or she sends payment for the goods in tandem with the same shipment information they received.
Advantages Of Drop Shipping
Following the description of this business model, there are several advantages of using the model that you can cognize. For instance, the capital requirement that are needed in order to start the business is significantly reduced. Since one does not need to stock up the goods that he or she as a retailer is selling, they do not need a large amount of capital to invest in the business.
At the same time, the running cost is also significantly reduced. Traditionally, retailing entailed investing in warehousing for the goods that are sold. This required budgeting for recurrent expenditure in the form of warehouse attendants’ salaries as well as rent for the warehouse. With a drop shipping model, such kinds of costs do not arise.
This model also accords online retailers a great deal of spatial flexibility. Since there is no physical interaction of the goods and the retailer, the retailer can essentially be located anywhere without jeopardizing their business. This is especially the case when the model in use has a cross-border dropping shipping set up. The retailer can be located miles away from the supplier, even in a different country and run a successful business retailing goods from virtually any corner of the world.
However, as with every other business, there are advantages. Since the start-up cost and running costs are quite small it enables retailers to price their goods very cheaply, thus reducing the amount of profit margins attainable per unit of goods sold.
Cross border drop shipping logistics
Unlike in a traditional retail business where a brick-and-mortar model is utilized with overwhelming logistics, the logistics of retailing goods in a drop shipping model are quite simplified, especially from a retailer’s point of view. This is because the retailers do not have need to keep and constantly update their inventory.
The logistics of drop shipping for the retailer simply entails taking the information they received from the customer, sending the same information to the manufacturer or wholesaler and paying from the shipment. The supplier thereafter is charged with the responsibility of transferring the goods in question to the final destination.
Private Label Drop Shipping
Private label drop shipping is a form of drop shipping with an additional twist to the business model. The same principles of retail supply of goods directly from the manufacturer is maintained. However, an element of branding is added to the goods being sold.
In this regard, a retailer usually enters an agreement with the supplier of the goods to have the goods packaging made differently thus, effectively acquire a different brand. However, all quality standards pertaining to the goods’ original brand are maintained. The only thing that changes is the brand, which is created, advertised and supplied by the retailer as their own.
Usually when a retailer receives an order for a good that has a private label, he or she places an order to the supplier who in turn packages the goods to the specifications of the retailer’s brand and ships it to the consumer. No indication of the original brand is retained in the packaging and when a customer receives their product, they are left completely unaware of the original brand.
Due to the reduced running costs and the competitiveness associated with drop shipping, many retailers sell their products at a slightly lower price than that of the original brands in conventional stores. However, there are some retailers who utilize this model to create prime brands which they use to sell products exorbitantly than the original product from the manufacturers.
Private label drop shipping business model has effectively been utilized to retail food staff and cosmetic products. For other products, it may be difficult as many manufacturing companies want to have complete control of their brands, thus they effectively ban this practice.