Drop Shipping

There are also distributors and companies that will ship your orders out for you. Some manufacturers and distributors, sometimes for an additional fee, will ship their merchandise directly to the customer in your name. This is called drop shipping. Whether your distributors or manufacturers will do this depends on what you are selling and those company's policies. The advantage of this is, of course, that you don't have to stock everything or some of what you sell. You receive the order and payment, send the distributor their payment and the customers information, and they ship the order.

The disadvantages, besides whether they have it in stock, is that you are working on their schedule and don't have much control over their quality. They deal with you, and you deal with the customer. If it takes them a long time to get around to shipping it, you're the one taking the heat from the customer. If they don't pack it well and it arrives damaged, or send the wrong product, or if they send it to the wrong address, the customer doesn't want to hear that it's not your fault because you didn't send it. Also, some distributors don't take back returns unless it's due to damage, so if the customer decides they don't like it and wants to return it, it goes to you.

In deciding what method of stocking merchandise you want to use, remember that people will judge your online store based on three criteria; their experience when buying, how quickly they get their order, and how quickly they are responded to if they have a question or problem. Your goal is repeat business.

There's an old business adage that it takes six new customers to make up for one lost customer. That means that if you upset one customer who would have returned to buy from your store more than once, on average you'll have to get six new customers to make up for that one customer you lost. If not stocking merchandise means that your customers will have to wait an unreasonable amount of time for their order, one of the criteria they judge on, the odds drop dramatically of them being a return customer.

How long is an unreasonable amount of time? That depends on what you are selling. Very generally speaking, people expect consumable products, products that need to be replaced periodically, quicker than they expect other things. The most likely reason for that is because they know they will have to buy it again and don't want to have to wait long each time.