Drop Shipping, Outsourcing, And Your Home Business: What You Need To Know

For many home based business owners, there comes a time in their growth when their business outgrows their home. A “lucky victim” of their own success, the home business or ecommerce business owner finds their capacity to accommodate, ship, and track their flow of inventory has become exceeded by the demand for their products.

This point of growth is in many ways a tipping point for the small business, a growing pain that can in many ways make or break its fledgling success. The ability to manage fulfillment logistics and successfully complete transactions is the bedrock of any business endeavor, whether brick and mortar or ecommerce. Failure to successfully negotiate such fulfillment service can lead to a kind of feedback loop that eventually sends the small business or ecommerce business backwards in size and profitability.

Outsourcing to a Fulfillment Service Company Provides A Solution.

Having reached such a turning point in their business’ growth, many small business owners choose to outsource their warehousing, packing and shipping, and logistics needs to a third-party fulfillment service provider better equipped and knowledgeable in those areas of responsibility.

Fulfillment service companies do not offer a product of their own to the public. Rather, they provide businesses with drop-ship opportunities and services on a scale that will help ensure the business’ continued growth.

A Simple Definition of Drop Shipping

With most third party fulfillment service providers, inventory for the client business is delivered to their warehousing facilities and shipped to the customer, with no participation necessary on the part of the small business client. The business owner simply orders the inventory desired and has it delivered to the fulfillment service company’s warehouse facilities. The fulfillment service company than stores the products until they are sold.

Drop shipping is the process by which the fulfillment service company packages and ships the product to a customer – using the client business’ name and logo on the packaging. The fulfillment service company remains an “invisible” participant in the business transaction.

The Vested Profit Incentive For Fulfillment Service Companies

Many fulfillment service companies charge a small percentage of each product sold as their service fee. This provides the small business owner client with a unique advantage: the more product successfully stored, shipped, and delivered, the higher the profits for the fulfillment service company. The small business owner can rest assured that superior job performance is in the fulfillment service company’s own best interests.
 

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