It may seem like a good idea to become a drop shipper. Perhaps you’ve had a classmate, colleague or even your younger cousin who introduced you to this topic. And when they explain it to you, it sounds like a business that just cannot fail.
“Think about it” they’d say, “you buy low, directly at the manufacturer, and sell high, directly to your online customers.” So, if it is really this simple as they claim, why aren’t more people doing it?
Shipping
Usually, drop shippers never physically see the items they are selling. They are somewhat of a middle man in the world of online sales.
However, the situation can get a little more complicated depending on where your products are being shipped to. Paying taxes in multiple countries, following regulations of other countries you might not be all too familiar with, and of course the costs of shipping items overseas. Perhaps this is why many sellers prefer to buy and sell within the borders of their own country.
So, do all those drop shippers organize their own shipping? Did your younger cousin really do all this research? Perhaps he did his research and is now shipping phones or watches all by himself, but for most drop shippers, they can rely on freight forwarders!
Freight forwarders
These companies are the perfect solution to this problem as they can take care of almost anything shipping or freight related. These companies usually have years of experience shipping the most complex orders across the most bureaucratic borders you can think of.
Let’s take your younger cousin as an example. If he is shipping phones without outside help, chances are that he is not renting a sea container all for himself. If he would, it would mean that each time he ships phones to his place, he ships a lot. In his situation it would probably make sense to use LCL shipping, or Less than container load.
Many freight forwarders make use of this shipping method. With this approach, a drop shipper only pays for the volume it needs, compared to a flat rate that comes with booking a container.
FCL and LCL
The opposite of LCL shipping is FCL shipping. Ordering an FCL container makes more financial sense if each load is big enough to occupy a full container. This does obviously require bigger warehouses, but once that is taken care of, FCL can start to be cheaper.
Some freight forwarders have different so-called tipping points where it is cheaper to order an FCL, compared to sticking with LCL. If you plan to ship products, it can never hurt to do some more research on this topic!
What they won’t do for you
It must be noted that freight forwarders do not move the actual products themselves.
Instead, they specialize in finding the best possible shipping methods one can find. They also make sure that all paperwork is handled and the correct certificates are attached to each freight, regardless of which borders are crossed.