Distribution Options for Online Businesses

There has been a lot of interest in starting online retail businesses lately. All of the necessary components to start one are accessible and readily available so it has never been easier.

The downside to this is that a market with so few barriers to entry becomes crowded quickly. It is important to decide which business model will provide you with the right level of workload, costs, flexibility, and ability to differentiate yourself to make your business successful. In a market where brand and trade name awareness is increasing, it is important to remember that should you open an online store, you will have to compete directly with all the others, and pay for all of your own marketing.

When you’re setting up shop, one of the questions that will need answering is whether or not to warehouse your own goods to keep everything in stock, or get your suppliers to drop ship (where you make the sale, but you have your supplier ship product directly to the customer) for you.

By relying solely on drop shipping, and therefore not having a need for a warehouse, you can cut your cost base. You do not need staff to ship goods,Relying on drop shipping can cut your cost base you do not have to pay to store them, and you do not have to invest upfront capital in buying the goods. Drop shipping can be a way of dealing with high-cost or specialty items (or perishable products, infrequent sales, or even odd sizes) that you wish to offer. It can be successful as you will be able to benefit from bulk pricing on many items and have more control over your business. Many major wholesale vendors now have drop shipping programs.

However, when using drop shippers, you cannot take advantage of discount or bulk wholesale prices, control the shipping time and costs, or track the availability of the inventory you are selling. It is unlikely that a business based on purely drop-shipped merchandise will allow you to establish a loyal clientele as customers will figure out that your company is essentially virtual, and may prefer to do business with someone who has the goods in hand, and can guarantee faster shipping or better discounts.

Despite the ease of start-up for an online retailer or distributor, the question of how goods are stored and shipped is worth careful consideration to ensure you maximize your profits and your customers’ experience.

About click to enlargeThe adult boutique business is now mainstream and no longer hidden in back alleyways. It is a rare retail category which does not have “big box” discounter competition.

Karen Bedinger’s book, Start & Run an Adult Boutique, is available in our Web store, and will provide you with a lot more information on how you can successfully own an adult store.

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