In online trading, one trend is more than clear: the larger and more bulky an item is, the smaller the competition will be. A look at the Internet immediately confirms this impression. While there are innumerable suppliers who trade with mobile phone accessories, electrical articles, sound carriers or other, rather small products, one must already investigate something more thoroughly after a dealer for finished garages, forklifts, Carports, garden pavilions, whirlpools, saunas, fitness devices, fire-places and stoves or riding on mowers.
Reason enough for ambitious online retailers to take a closer look at these product areas. Anyone who combines this product branch with modern drop shipping, i.e. does not buy the goods in advance, does not store them himself and does not ship them himself, will quickly discover a trade area that has a lot to offer.
In the following we would like to introduce you to the advantages of trading large and bulky goods via drop shipping. You will learn how low competitive pressure affects your business, how to generate high sales and profits with few sales per month, how to easily find suppliers who offer DropShipping, what are the advantages in terms of shipping costs compared to the traditional stocking trade and how this improves your own market chances, how you benefit from low return rates and how the trade with large and rather high-priced products leads to more trust in you by consumers and end customers.
In addition, we will also discuss the existing risk potentials of this form of trading and explain step by step what needs to be considered if you want to successfully trade large and bulky products as a DropShipper.
The bigger the product, the smaller the competition
When online merchants decide to sell large, bulky goods, they have to deal with problems that the DropShipper does not know about. In classic retail, large goods require enormous storage space and thus high rental and ancillary costs. In addition, there are investments in suitable shelving systems and other technical facilities that are not needed when trading comparatively small products. Even the demands on the personnel can be higher here if, for example, forklift trucks or other storage equipment must be used which require a certain training. If you also have to deal with the transport of large goods yourself, you will need special transporters or trucks, the purchase and maintenance of which are in turn associated with high costs. Also the effort and the expenses around the area of packaging are considerably higher than it is the case in comparison with smaller and handy products.
Large rooms, special equipment and machines, but also particularly large cardboard boxes, oversized foils and large quantities of filling material quickly consume a fortune. In short, trading in large and bulky products is, if you don’t work with drop shipping, expensive, with special expertise, enormous costs and considerable investment. Only a few online merchants can represent this in total. As a result, there is much less competition to trade in these products than in other product categories.
Those who become active here with the techniques of DropShipping will not be hit by the disadvantages mentioned. In this case, storage, packaging and dispatch shall be carried out by the supplier. The DropShipping dealer himself benefits fully from the low competition without having to accept the disadvantages of trading bulky and large goods. The low level of competition has a positive effect in several respects.
On the one hand, it is much easier to draw the attention of interested consumers to one’s own offer. Only a few market participants fight for the highest ranks at Google & Co. and so it is connected with less big problems to place the own presence on the web positively at the search engines than it is the case in the highly competitive mass markets.
Mass markets also lead to a pronounced price war between the numerous dealers in the respective segment. The situation is different in the trade with large and bulky goods: the low competitive pressure here ensures a moderate price war and enables dealers who offer such products via drop shipping to achieve excellent profit margins and trade margins. In the following sections we will show you the further advantages associated with the sale of large and bulky products.
High turnover with the sale of fewer products
Who trades with ordinary goods of the daily need, must sell many of them, in order to be able to make a sufficient living. Imagine trading in products that cost only a few euros. Even with a high profit margin and modest demands on one’s own profit, thousands of items have to be sold successfully month after month in order to generate the fixed costs and a low profit.
In turn, the sale of numerous commodities means that many buyers have to be found and convinced. If one assumes that it is associated with effort, time and money to win a new customer, it is of course much easier to earn one’s income with large and expensive products.
Calculation example for the trade with prefabricated garages
For a model that costs the end customer 6,900.00 euros and generates a profit of 15% of the net price, the dealer has a profit of 869.75 euros before tax per garage sold. If you now assume only four garages sold per month, i.e. one sale per week, then a monthly profit before taxes of 3,479.00 euros already results.
In addition, with this model, the dealer has significantly more time to focus on marketing, customer support and SEO than a dealer would be able to handle hundreds of weekly orders. The sale of the prefabricated garages cited above does not require a large number of employees, nor does it require special software or time-consuming processing. Even the bookkeeping is easy here, as there are only a few incoming and outgoing invoices to be booked. The business model is clear and easy to understand, even for newcomers.
Partner search made easy: bulky goods are delivered directly by most suppliers anyway
One of the biggest difficulties for DropShipping dealers is probably the search for suitable suppliers who actively support such a form of shipment. Anyone who deals with small mass products will hear frequent refusals from potential supply partners when they make enquiries. This is not because these wholesalers or manufacturers are generally not interested in good business. The point is rather that for such a company, the sale and dispatch of only one product can generally hardly pay off.
Imagine a company dealing in plastic footballs. These are usually sold to department store chains, large mail order companies, purchasing cooperatives or even larger online shops. The average sales volume is expected to be in the range of several hundred balls. The balls will probably be shipped in wire boxes, at least if they have already been inflated.
If the same provider would now agree to offer its balls individually via drop shipping, it would have to make a completely different calculation. This would include the increased effort for packing and shipping individual balls, which would have to be sent as a package due to their large volume. Since these costs would have to be borne in any case, the ball would be disproportionately high for the end customer compared to the price in the consumer market, in the catalogue or in a large online shop. The consequence: For the manufacturer or wholesaler it is not particularly interesting to offer his products by DropShipping.
The situation is completely different with large and bulky products. Here the manufacturer or wholesaler usually delivers directly to the end customer anyway. Imagine a furniture store, for example. Although some of the available models are exhibited here, the exhibition contains only a small part of the programme actually available. Each available piece is usually available in different sizes, colours, woods or finishes.
If an end customer decides to buy this or that sofa in the colour of his choice, it is manufactured specifically for him and then sent to him. Here the transport very often does not first take place to the furniture store but rather directly to the ordering end customer. You see: The DropShipping principle has existed for a long time in relation to large and bulky products. The online retailer with DropShipping ambitions can benefit from these already existing structures and will have it easy to find suitable suppliers.
DropShippers benefit from the high storage and shipping costs of traditional retailers
Before we begin to enumerate the other advantages that the trade with bulky products brings with it via drop shipping, let us first take a look at the disadvantages for the sake of balance. Imagine an online retailer selling large and bulky goods without the use of drop shipping. He orders the sales goods in advance from his suppliers. If the customer increases the quantity, he will receive a discount from the respective supplier which is not available to the DropShipping dealer.
Let’s assume in this example that the classically working retailer stocks some carports, garden pavilions or home saunas. There is one thing you have to be clear about: he will certainly not buy 100 or 500 or even 1000 carports and store them. In reality, we may be talking about two or four or five products. What will be the discount granted by the manufacturer? We can assume that the additional discount compared to an individual order is not particularly high and remains well below the 10% mark.
Now to the drawbacks. The classic retailer buys the products before reselling them. He must therefore not only pay for them, but also have them transported to him and stored. He needs capital, suitable premises and personnel. In addition, he bears the risk of not being able to sell the purchased products as desired. A new manufacturer with attractive prices, a new technical development or even an economic crisis and the goods purchased at high prices quickly prove to be unsaleable or have to be thrown onto the market at the lowest prices.
In addition, the multiple shipment of goods entails the risk of damage and minor defects to the goods. This can then often only be offered as B-goods at lower prices. The classic trader must include these risk potentials in his price calculation in order to survive economically. The DropShipping retailer does not know the costs and risks mentioned and will only pay a surcharge of a few percent when purchasing. As a result, it will be able to offer its products on the market at a significantly lower price and will also achieve a higher profit margin. The advantages of mail order via drop shipping are obvious: no capital requirement, no goods risk, less workload and higher profit margins speak for themselves.
Low or eliminated shipping costs significantly improve market opportunities
Manufacturers and wholesalers dealing in bulky and large products have proven and tested transport systems. For these companies, the organisation of problematic transports is not the exception, but part of their daily duties. Either the transport is carried out here with our own fleet of vehicles or there are long-term contracts with transport companies and forwarding agents. In any case, one can assume that the transport will be optimized again and again by the corresponding supplier companies from an economic point of view.
This also benefits the DropShipping dealer to a great extent. If, for example, shipping is carried out via the manufacturer’s or wholesaler’s own transport network, the shipping costs for the DropShipping dealer are either very low or are completely eliminated. For the supplier, delivery to the end customer is no exception. Therefore, there is no reason for him to charge high extra costs or surcharges for this.
This enables the DropShipping trader to offer its customers the shipment of goods either at a very low price or even free of charge. Practice in the online trade shows that the consumer clearly prefers offers for which no shipping costs are charged. This gives the DropShipping dealer a clear market advantage over “stocked” competitors.
Large products lead to low return rates in practice
A high return rate is a major problem for any online retailer. The law stipulates that any product ordered via the Internet can be returned within 14 days without giving reasons and in this case the purchase price must be refunded. It is up to the retailer to restore the returned goods to their original condition. Even if this must not be damaged by the consumer’s trial use, it is still necessary to replace small overpacks, iron garments or put multi-part products back exactly into their packaging.
In practice, it is hardly possible to restore a product from the return shipment completely to its original condition. Here remains only the sale at the reduced price or the auction via eBay. In both cases, the trader no longer earns his full margin here and also has an increased workload.
In practice, the consumer-friendly right of return often leads to consumer behaviour that represents an economic and time-consuming burden for the retailer. Product areas such as electrical goods or clothing in particular have extremely high return rates. In the clothing sector, the return of products has already become a standard behaviour of customers. A particular garment is ordered directly in two sizes to try out at home which fits better.
The return shipment is therefore already fixed with the order. Some consumers even use the right of return to order clothes, shoes and jewellery for a festive occasion and send these products back afterwards. Even if the right of return is understandable, fair and comprehensible from the consumer’s point of view, it is often not considered here that the burdens of this right must be borne by online traders.
It is in the nature of things that certain products and categories of goods are associated with certain return rates. As already mentioned, these are particularly high for clothing, electronics and other small and rather low-priced products. Here the customer does not think long before the completion of the order. Careless purchases, which are already regretted the next day, are pre-programmed here. One can imagine that a consumer, before ordering a carport, a whirlpool, a fountain for the garden or a fireplace, thinks for a while about his purchase plans and places the order only when he is sure that he actually wants to buy the product.
Both the expense of shipping and packaging and the rather high price clearly discourage consumers from ordering a product on a trial basis only and from already planning the return shipment. DropShipping dealers who specialize in trading large, bulky products benefit from the comparatively low return rates, which save both time and money.
Specialisation in large products promotes basic consumer confidence
Those who trade in large products are assumed by the consumer to have a high level of competence and a certain company size on the market. Nobody can imagine that trading in prefabricated garages, ride-on mowers, whirlpools or other large, bulky products is perhaps only done by one person working part-time from home. This approach leads to an advance of trust by the buyer, which can lead to a higher sales quota than is the case when trading in products that are considered to be mass-produced or already have a rather dubious reputation.
The dedicated DropShipping retailer has a number of ways to support and reinforce this positive consumer assessment. It has proved successful to be able to demonstrate specialisation within a certain niche. For example, if you are dealing in free-standing, heated outdoor spas, you can increase confidence by trading not just one but 10 or 20 different models instead. The more documentation the retailer offers his customers, the more professional is his public image. If there is an offer to request brochures, product videos can be seen, customer ratings are published and the dealer provides a lot of background information about the represented product area, then the customer’s trust increases enormously. This in turn leads to a significantly higher sales ratio.
As with any other online retailer, the same applies to the DropShipping retailer: Don’t disappoint the trust your potential customers place in you before they make a purchase. Try to provide impeccable customer service and prove to your buyers that you deserve the trust they have placed in you. In this way you build an excellent reputation and the recommendation of your services by your customers is the most valuable advertisement you can receive for your company.
Drop shipping large and bulky products: special attention should be paid to this
If you are an online retailer interested in selling bulky and large goods via drop shipping, then you are on the right track conceptually. So far, we have shown you the decisive advantages of this form of trade and shown you that you can gain a clear advantage over the retailer who stocks the goods himself. Before you start to design and implement an appropriate business model, we would like to briefly name a few essential aspects that need to be taken into account in this form of retail.
As a DropShipping dealer, you should always clearly agree with your suppliers how to proceed in the event of returns, revocation, and warranty or guarantee claims. What is already extremely useful when trading with smaller products, becomes the indispensable basis of your business when selling large, bulky and thus expensive goods. In any case, you should only work with suppliers who, in all cases mentioned, take back the goods without objection and who are also responsible for collecting the corresponding goods from the end customer. In addition, always agree with your supplier that he is responsible for damage during transport and that a suitable transport insurance exists.
In contrast, you should clarify clearly with your end customers during the order process whether delivery is possible at all with regard to the structural conditions. Not every billiard table can be transported to every attic flat. Not every access road is large enough for a truck and not every garden path is wide enough to transport an outdoor whirlpool. In the product description, clearly state the requirements that arise during transport and oblige the customer to check these requirements and take responsibility for them. In addition, save the delivery date twice. In contrast to delivery by parcel service, it is not possible with these deliveries without additional costs that a customer is approached several times if he is initially not reachable.
If you take these critical aspects into account and incorporate them into your individual trading concept, then the sale of large and bulky products via drop shipping offers you excellent prospects for good sales and high profit margins.
The advantages of trading large and bulky products are really impressive. But did you know that DropShipping can also score in the B2B sector? We provide 5 proven strategies for dedicated retailers and show you concretely how well B2B concepts and DropShipping harmonize.
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