Selling products used to be a simple process. The business owner bought the products in bulk from the manufacturer. Due to the massive purchase, the business owner got a bargain deal. He then sold the products individually at the average price. This led to a successful business with huge profit margins. Then what exactly happened that evolved this basic purchase and sell model to drop shopping?
In the 1950s, some business owners started facing issues of storage. They had to pay rents for warehouses to store products that weren’t to be sold in the near future. Eventually, the storage cost exceeded their profits. They figured out that they won’t manufacture and store their products. Instead, they sent out catalogs that had pictures and details of every single item. These catalogs were mailed to potential clients. Interested people could place an order. Once the company received confirm orders, they began the process of manufacturing. This way, they only had to pay the expenses of raw material, storage, processing, etc. of the final products that had already been sold. It was a win-win situation which is why the trend extended further.
JIT manufacturing is just in time manufacturing. This was the next step in the business world. After the method with the catalogs was successful, business minded people took it a step further. Now, a third party was involved. Instead of the company sending out direct catalogs, independent people started doing the job. They would promote products to people and get orders. These orders were then forwarded to the manufacturer. The product was manufactured ‘just in time’ for the delivery. This method was the most advance drop shipping method for that time. The JIT manufacturing was also a pretty fast service so there was no inconvenience as such. The manufacturer would produce the item within 3 to 4 days.
The market was very limited with these methods. With the introduction of the internet services, the exposure increased to a whole new level. The idea of these previous methods was improvised with the latest advancements.
The drop shipping model that is implemented today is at such a huge scale all because of ecommerce. The idea of online businesses encouraged retailers and manufacturers to connect with each other as well as with a wider consumer community. This has increased the market by huge percentages. At the same time, this model of drop shipping has expanded the options too.
Till a few years ago, drop shipping wasn’t very widely known. But, as shipping facilities have improved, so has this business model. Moreover, exposure to this new business model has encouraged better software options as well. All in all, every aspect has been polished and improved one at a time. The drop shipping business model we know today actually started as a simple idea decades ago. Gradually but successfully, it adapted to the needs and technologies of time to result in such a successful business model!
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