DROP SHIPPING

PRESENTED BY :
• ADNANE LAHLAL
• HAMZA EL BENNANI
 PLAN

Introduction
I. What is drop shipping ?
II. The forms of drop shipping
III.The types of drop shipping
IV.Benefits and disadvantages of drop shipping
Conclusion

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PROBLEMATIC

What's the connection between the supply chain and drop shipping ?

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INTRODUCTION

Drop shipping usually describes the movement of products from a manufacturer

directly to a customer without going through traditional distribution channels.
 In practice, this means that a retailer does not keep goods in inventory but
simply takes orders for products and then sends the orders to the manufacturer.
The manufacturer (or another retailer or wholesaler) is then responsible for
fulfilling the customer’s order. 

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www.apics.org 4
WHAT IS DROP SHIPPING ?

• Drop shipping is a retail fulfillment

method where a store doesn’t keep the
products it sells in stock. Instead, when a
store sells a product using the drop
shipping model, it purchases the item
from a third party and has it shipped
directly to the customer. As a result, the
seller doesn’t have to handle the
product directly.

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www.shopify.com
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THE FORMS OF DROP SHIPPING

There are two distinct forms of drop shipping:

System a and system b.
• In system (a), the distributor receives the orders and will then set the quantity to
be produced for the supplier, it is the supplier who bears the costs of overstocks
(pull-flow or just-in-time system).
• The system (b): the supplier receives the orders placed by the Internet users of a
merchant website and decides himself on the quantities to be manufacture.
Unlike the former, it is the latter that suffers the costs associated with a
overstock (push system).

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https://fr.slideshare.net/penseragir802/daipo-drop-shipping 6
TYPES OF DROP SHIPPING

 Product reselling

The most common type of drop shipping is where a company finds products from
a variety of sources and makes them available for online purchase all in one place.
These businesses make it easier for the general public to find and purchase these
products. Also, these businesses usually provide extra value through in-depth
reviews of the products, unique content about the products, or a curated library
of resources for the products.

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help.shopify.com/en/manual/products/dropshipping/what-is-dropshipping/types-of-dropshipping 7
TYPES OF DROP SHIPPING

 Business extensions

Many retail stores don't have an online presence. Although they

might want one, many don't have the time, funds, or knowledge
to put their business online. Some dropshipping companies
choose to work with these businesses and become their online
presence. Each time the dropshipping business gets a sale, they
ask the retail store to ship the item to the customer.

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TYPES OF DROP SHIPPING

 Product creation

Some dropshipping businesses choose to bundle or group products

together and have them available for purchase as one product. For
example, a dropshipping business could find a supplier with a large
product line of craft supplies and build their own crafts using those
supplies. By creating new craft ideas, the dropshipping company can
bundle the craft supplies together and sell a "Make your own craft" kit.
They can then dropship the supplies and email the customer
instructions, or make the instructions available for download on the
website after purchase.

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TYPES OF DROP SHIPPING

 Print on demand

Print on demand is a type of dropshipping where a company wants to sell products

that have either text or an image printed onto them. Most printing services offer a
wide selection of products to print on, such as shower curtains, mugs, pet food
bowls, and T-shirts.
For example, a music band might want to increase their awareness by selling
products with pictures of the band or just the band name printed on them. By
working with a print on demand service, they can upload their images and each time
they make a sale, the service prints the product and ships it to the customer on
behalf of the band.
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https://help.shopify.com/en/manual/products/dropshipping/what-is-dropshipping/types-of-dropshipping
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BENEFITS OF DROP SHIPPING

 Less capital is required

Probably the biggest advantage to dropshipping is that it’s possible to launch an

ecommerce store without having to invest thousands of in inventory up front.
Traditionally, retailers have had to tie up huge amounts of capital purchasing
inventory.

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www.octovid.com/shopify-dropshipping-business-model-for-new-ecommerce-entrepreneurs/
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BENEFITS OF DROP SHIPPING

Running an ecommerce business is much easier when you don’t have to deal with
physical products. With dropshipping, you don’t have to worry about:
• Managing or paying for a warehouse
• Packing and shipping your orders
• Tracking inventory for accounting reasons
• Handling returns and inbound shipments
• Continually ordering products and managing stock level

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BENEFITS OF DROP SHIPPING

 Low overhead

Because you don’t have to deal with purchasing inventory or managing a

warehouse, your overhead expenses are quite low. In fact, many successful
dropshipping stores are run as home-based businesses, requiring little more than a
laptop and a few recurring expenses to operate. As you grow, these costs will likely
increase but will still be low compared to those of traditional brick-and-mortar
businesses.

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BENEFITS OF DROP SHIPPING

 Flexible location

A dropshipping business can be run from just about anywhere with an

internet connection. As long as you can communicate with suppliers and
customers easily, you can run and manage your business.

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DISADVANTAGES OF DROP SHIPPING

 Low margins

Low margins are the biggest disadvantage to operating in a highly competitive

dropshipping vertical. Because it’s so easy to get started, and the overhead costs are so
minimal, many competing stores will set up shop and sell items at rock-bottom prices in
an attempt to grow revenue. Since they’ve invested so little in getting the business
started, they can afford to operate on minuscule margins.

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DISADVANTAGES OF DROP SHIPPING

 Inventory issues
If you stock all your own products, it’s relatively simple to keep track of which items are in
and out of stock. But when you’re sourcing from multiple warehouses, which are also
fulfilling orders for other merchants, inventory can change on a daily basis. Fortunately,
these days, there are a handful of apps that let you synchronize with suppliers. So drop
shippers can “pass along” orders to a supplier with a click or two and should be able to
see in real-time how much inventory the supplier has.

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DISADVANTAGES OF DROP SHIPPING

 Shipping complexities

If you work with multiple suppliers—as most drop shippers do—the

products on your online store will be sourced through a number of different
drop shippers. This complicates your shipping costs.

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DISADVANTAGES OF DROP SHIPPING

 Limited customization and branding

Unlike custom-made products or print on demand, dropshipping doesn’t

give you a lot of control over the product itself. Usually, the product drop
shipped is designed and branded by the supplier.

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DISADVANTAGES OF DROP SHIPPING

 Supplier errors

Even the best dropshipping suppliers make mistakes fulfilling orders—mistakes for which
you have to take responsibility and apologize. And mediocre and low-quality suppliers
will cause endless frustration with missing items, botched shipments, and low-quality
packing, which can damage your business’s reputation.

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CONCLUSION

The fact is, drop shipping doesn't actually fit into the supply chain.
Drop shipping has no role in the supply chain, per se. It is one of many supply
chain management techniques, and it may or may not be applicable at
all, depending on circumstances. Drop shipping may be more specifically
characterized as a movable part of a supply chain network, where a drop shipper
may be the manufacturer, wholesaler, or retailer. There is no clearly defined role
for a drop shipper because it's the client-facing side of retailing, rather than a part
of the supply chain.

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