Drop shipping allows businesses to outsource major components of their manufacturing and fulfillment processes. In doing so, businesses can avoid having to manufacture and ship products in-house, potentially saving thousands of dollars on facilities, equipment, and labor.
While the benefits of drop shipping vary between businesses, here are just a few of the advantages you can expect by implementing drop shipping:
Drop shipping radically reduces costs for many businesses by outsourcing essential (and expensive) parts of the product lifecycle.
For example, a business selling parts manufactured by computer numeric control (CNC) could have a drop shipper manufacture and ship the parts for them. In doing so, the business would avoid having to set up a machine shop and parts warehouse, thereby saving thousands on rent, utilities, a CNC machine, and skilled labor.
Part of what allows for this capability is economy of scale. Where the business from the prior example could spend thousands on CNC manufacturing facilities, the drop shipper could instead spend the same amount of money but deal with multiple supply lines. By “centralizing” production this way, the cost per unit is dramatically lowered and the drop shipper can pass the savings on to their clients.
Scalability and Flexibility
Drop shipping also provides businesses with far greater flexibility and scalability. Since drop shippers deal with multiple clients, their sourcing and production capabilities are more robust and streamlined than almost any individual shop could be.
As a result, if a business needs to suddenly expand production capacity, they won’t have to be burdened with expanding their facilities; with a drop shipper, the facilities are already there and ready to go.
Many drop shippers maintain exclusive arrangements with sourcing companies, allowing them to produce at nearly any capacity. Where many businesses could get tied up in supply lines, drop shippers can fulfill any size order with relative ease.
This capability allows businesses to offer their customers nearly unlimited inventory without having to invest in expensive warehouses or production facilities.
True to their name, drop shippers offer shipping and fulfillment service as their primary service. Logistics alone can be difficult for many businesses, especially as customers demand quick shipping times and high-quality, consistent packaging.
Instead of having to handle the logistics themselves, businesses can rely on drop shippers to handle their logistics instead. Like with manufacturing, doing this allows businesses to avoid having to invest in product warehouses and staff.
Between sourcing, manufacturing, and logistics, the product lifecycle requires extensive management. For businesses whose primary focus is in design or small production, having to manage both manufacturing and fulfillment can require an unreasonable amount of time and money.
With a drop shipper, businesses can focus on their product design without having to become manufacturers themselves. If you’re a business in need of rapid prototyping services or CNC production capabilities, call our team at 440-582-8430.