Drop Shipping: Is it the Right Choice?
Drop shipping was recently heralded as the future of e-commerce. Consumers and sellers alike were amazed at how quickly and easily products could be shipped across the country or across the world and into the hands of paying customers. However, COVID-19 has had a tremendous impact on drop shipping, dethroning the e-commerce king at the height of its reign.
So what is drop shipping, what has it become, and where can e-commerce go from here?
A Brief History of Drop Shipping
Before COVID-19, drop shipping was the new leader of e-commerce. A form of fulfillment management that allows businesses to sell items that they do not own themselves, drop shipping allows items to be transported via passenger planes to their desired locations. Using this method, items could be shipped from places like China to customers in the USA in as little as 3–5 days. Additionally, thanks to companies like AliExpress and Oberlo, drop shipping was becoming readily available to anyone wanting to manage a business via dropshipping.
Drop Shipping in a Post-COVID World
Because of COVID-19, three key things have happened to effect drop shipping:
1. Shipping Rates: Shipping rates, in general, have increased dramatically, with international shipping rates becoming particularly high. This is because, when it comes to drop shipping, every shipping service and carrier supplements their own fleet with commercial airline flights.
For example, if you have a full flight flying from Shanghai to L.A., the plane also has cargo space underneath. Not every passenger will check bags in, so there is a lot of leftover cargo space in the underbelly of these planes. There’s actually more space underneath these planes for storage than in the passenger area of the plane. A majority of the time, extra cargo space is rented out to shipping carriers for them to supplement their shipping services.
2. Less Air Travel: The reason that drop shipping rates have skyrocketed is that there are less planes flying. Due to COVID-19, air travel no longer exists in the way that it did before, especially when it comes to international flights. Many planes are grounded, and shipping carriers no longer have the ability to supplement their services with commercial flights.
If there are no planes to fly out items, there’s not much else shipping carriers can do. Passenger planes can not become cargo planes because it’s not worth the money for the airline.
3. Significant Shipping Delays: Finally, because shipping rates have increased and flights have decreased, there are significant delays in drop shipping. Everyone is fighting for a cargo space on a passenger plane, resulting in longer waits. Items that could easily be delivered in 5–7 business days before now might instead take 2–6 weeks to be delivered.
As a consumer, purchasing something online and then realizing it’s not going to arrive for 6 weeks is a huge disappointment. At this point, many consumers are going to cancel their orders and instead look for a quicker alternative to the item they sought to be drop shipped.
Because of these three effects of COVID-19, drop shipping has encountered interesting and unique challenges. While drop shipping is not a new idea, it’s one that has become very easily accessible and normalized in e-commerce’s recent years. Now, many e-commerce sellers are left scratching their heads, wondering what the right next business move to make is.
Where Does E-Commerce Go From Here?
In many ways, e-commerce has reverted back to the way things were 10 years ago. 10–15 years ago, your delivery time was seen as a competitive advantage. It was a huge deal if you could get products to your customers in 2–5 days, because it typically took 5–7 days.
With the current state of drop shipping, there are a couple of new ways to have a competitive advantage in e-commerce:
- Find a domestically sourced drop ship partner.
- Carry inventory yourself so you can actually guarantee a 2–5 day delivery.
If you have the opportunity to manage your own inventory, take it. If you believe in your business and your products, try fulfilling your own orders via self-service or 3PL order management. The above methods once seemed to pale in comparison to drop shipping, but now they will give your business a competitive edge and help you to succeed.
What are your thoughts on drop shipping? Let us know in the comments below!
Originally published at https://www.soap-bx.com on August 28, 2020.
