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How dropshipping can help you test the market

Posted on 12 September 2018 at 10:52 AM

Success in the retail industry today is not easy. The 5-year success rate of the retail business is currently between 40-45%. If you want to achieve this in the retail industry, you must continue to grow your business. This is where dropshipping can help. This article will cover what is dropshipping, how it can help your business, and some use cases. let's start!

What is dropshipping and how does it help?

Direct sales is a way to implement a product, and the supplier delivers the product directly to the customer, without the need for the retailer to store the product in a warehouse. This model greatly reduces the risk of inventory costs. It also enables retailers to spend more time and money on marketing and analyzing sales of new products.

For most retailers, the introduction of a new product usually means storing a large number of products in a warehouse without guaranteeing that the product will actually be sold. This is why market testing is so important to retailers. Measuring the consumer's interest in the product you want to sell is invaluable when trying to diversify the product range. Untested products can end up causing considerable losses to the company.

The only real investment for retailers when using direct sales to test the market is time. Listing new products online, marketing through social media and other channels, and analyzing sales data is still a very cheap investment compared to the cost of purchasing and stocking products that are not guaranteed to be sold.

Even large retailers use direct sales models

Even vertically integrated brand retailers can take advantage of direct sales. Take a look at Apple. They acquired Beats and sold Nest products in their Apple stores, effectively introducing long tail products into their product lineup while gaining valuable sales data.

Dropshipping applies to all lifecycles of a product. First, measuring an interest in a more niche product can be difficult, but if the sale takes off, your company can always choose to move to the internal inventory of the product. After the product peaks and demand is not high, you can go back to the target inventory location to take full advantage of the remaining viability of the product without being burdened by large warehouse inventory.

Seasonal products are good direct sales projects

Seasonal products are also a great option for direct downloads. Christmas lights, Halloween decorations and fireworks sell well at some point during the year, but it is not wise to keep it at hand throughout the year. Dropshipping allows you to monetize without taking up storage space.

The Dropshipping model also enables retailers to add more long tail projects to their catalogs, increasing the variety of products without the risk of products that lack sustained high demand.

There are some drawbacks - you can't control the fulfillment directly, you can't personalize the product according to your needs, and the inevitable supplier problem. However, these shortcomings are much better and cheaper than the cost of accepting new untested products, and the issues that need to be addressed.

Also Read: dropship companies with no membership fees

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