Use Drop Shipping to Expand into New Markets

by Stuart Lisonbee

For retail businesses, expanding into a new market can be a risky proposition. Aside from additional marketing costs, there are also the costs of storing new inventory that may or may not sell.

This is just one more situation where drop shipping can help save you time, money, and a lot of unwanted stress. Just like drop shipping is a low risk way to break into the retail business, it can also help your existing business get its feet wet in new markets.

Let's take a look at an imaginary online retailer that sells camping equipment. For years, this retailer has focused on specializing in tents and sleeping bags only. Now, to increase sales and profits, he wants to expand into more camping accessories such as cookware, backpacks, propane, emergency equipment, and so forth. The problem is, he's worried that he won't be able to overcome his reputation as a "tents and sleeping bags only" store, and he'll be stuck with a lot of inventory he can't sell.

In comes the drop shipper. Now the tents-and-bags-only retailer can start offering an expanded offering on his website without risking an investment in inventory.

One of four scenarios could possibly occur:

1. He is unable to sell any items from his expanded catalog, and goes back to selling just tents and bags. He only loses a little time from the effort.
2. He sells some items, but not enough to justify bulk purchases of the additional items. He sticks with drop shipping the new items to keep his new customers happy and coming back for more. Hopefully, sales continue to increase and his expanded selection becomes a major part of his business.
3. The expanded selection is a huge hit, so he starts purchasing inventory to save money by purchasing in bulk.
4. He finds that he loves the time he saves from drop shipping so much, he expands his drop shipping operation to include his tents and sleeping bags!

Whatever you're thinking about expanding into, drop shipping could be the solution for your business. Using a drop shipper will allow you to run your tests without the risk of losing money on inventory.

When looking for a drop shipper, the usual rules apply: make sure they provide real-time inventory reports to minimize the risk of backorders, make sure they use a reliable shipping provider that also provides tracking information, and make sure they process orders in a timely fashion so you don't end up with angry customers.Stuart Lisonbee is an eBay PowerSeller, eBay Certified Consultant, and former eBay employee. He currently works for Doba, a drop ship service provider, at www.doba.com