Administrative Costs


Drop High Administrative Costs With Drop Shipping

Are you a business owner who is looking for ways to cut costs related to inventory and shipping? Look no further than drop shipping, a just-in-time technique that allows you to order exactly what a customer wants without having to store lots of inventory for ages. Drop shipping allows you to skip everything from storage fees to high utility bills, and it can really help smaller businesses get a better footing financially.

Administrative Costs

Typical retail businesses often have to have lots of inventory stored away. This requires storage space, of course, as well as climate control, security, and staff costs for stocking shelves. All of these costs can really add up, making life tough for newer and smaller businesses that might not have a lot of cash flow. Plus, the initial outlay for the inventory can really hurt, placing a debt burden on the business and increasing the pressure to sell, sell, and sell.

With drop shipping, you need only a small amount of inventory. Brick and mortar stores will want to have a few items on hand to ensure the shelves stay stocked consistently, but online businesses won’t really need any inventory. When a customer orders something either online or in store when the current inventory does not include that item, the business can tell the manufacturer or wholesaler to send the item directly to the customer.

That also cuts out the step of having the customer return to the store. All he or she has to do is pay at the time of ordering and wait for the package to arrive.

Financial Protection

More importantly, though, drop shipping and not having inventory on site can save a business financially if disaster strikes. If a business has a lot of inventory stored away, and something like a fire happens, that inventory and the money used to buy it are goners. You’d hope that insurance would cover the loss, but that depends on the policy and the cause of the fire or other disaster. Plus, an insurance policy is likely to come with a deductible. So you still have to spend more money anyway to replace the inventory. You also waste time, waiting for the new shipment and trying to find new, undamaged storage space. Obviously, disaster can strike a wholesaler or manufacturer, affecting your ability to order items for customers. But your financial bottom line won’t take such a bad hit because it won’t be your storage space and your inventory that are damaged. If you really want to start saving money at your business, look at a drop shipping business.