Yet, there are thousands of retailers (including Sam's Club, Costco, and Amazon) who sell millions of dollars of merchandise every month and make a handsome profit doing it. For them, a drop ship product source increases their profit margins by slashing the amount of time and money they have to spend on managing inventory and packing and shipping products themselves.

The business case for determining whether a drop ship wholesaler service is the most cost-effective option for your retail business must look at a cost benefit analysis.

Exploring the benefits of a Drop Ship Wholesaler

Whether you're just getting started in the retail business or are running an established business, a drop ship service offers several benefits, including the following:

* Drop ship setup fees are minimal.

* Your supplier stores and manages inventory.

* Your supplier packs and ships products directly to your customers.

* You pay your supplier only after your customer pays you.

* You can test the market with little or no risk.

* You can focus more time and resources on dollar-productive activities, such as marketing, advertising, and product research, rather than on inventory management, packing, and shipping.

With a drop ship provider, you boost profits in several ways"cut costs, increase sales, save time, and reduce risk, and you can do it all with less manpower.

Assessing the Drop Ship Drawbacks

Although many retailers find that drop ship services provide them with an excellent product sourcing solution, it is by no means a perfect solution. Drop shipping comes with several drawbacks, including the following:

* You lose some control over shipping times, packaging processes, and package branding.

* Your supplier may run out of a hot-selling product.

* Drop fees may increase your expenses. (A drop-fee is a handling fee charged per shipped order.)

* You can't take advantage of bulk discounts.

Calculating the cost-advantage of using a Drop Ship Provider

When you're making a business decision, your choices basically boil down to whatever makes the most sense"or, more accurately, what makes the most dollars and cents. Calculate the savings of using a drop ship supplier and compare them to the costs of using a drop-ship supplier.