2020 has proved to be a very bad year for the economy. The outbreak of the COVID-19 epidemic has brought many businesses to the verge of bankruptcy and has even been able to completely dissolve several businesses. However, the severity of the outbreak on a business financially differed depending on the type of service or product provided. For example, a hotel is possibly more likely to have suffered as compared to an online store that provides goods from the comfort of a customer’s home. Drop-shipping is a strategy that has undergone several incremental developments over the last decade. However, its feasibility peaked before the coronavirus and then dropped significantly.
But, not all drop-shipping businesses suffered equally, this will make sense to individuals that know a little bit about what drop-shipping is. Drop-shipping is a sales strategy where the salesman provides a product to a customer without actually having this product in-stock, meaning that they would take orders to know the demand for a certain product, and then buy the same from another retailer for a lower price than what they sell it for. This process has gained a lot of traction over the years, and has become a very effective strategy as of late.
Due to several developments in the field of drop-shipping, most of the methods of sale has moved from physical retail to online retail. This is an advantage during the lockdown as the physical presence of a customer at a store is not actually required.
E-commerce industries such as Amazon™, does not always have all goods in stock. Especially during this epidemic, there has been a severe drop in the number of goods available. But, this is not that big an issue for drop-shippers as they are only required to provide enough stock to exactly meet the demand of the customer. This gives them a huge advantage over several e-commerce retailers around the world.
The largest problem that most goods’ salesmen face is the fact that they cannot cover that big an area to provide with their products due to the restraints on travel that exists to prevent the spread of COVID-19. Drop shippers find a solution to this problem by being able to provide solely at areas that require a specific product at a specific time, meaning that they can strategically provide the product in a very efficient manner, as they know exactly the geography that must be covered to reach all their customers by covering the least area possible to increase efficiency.
Now, what may seem interesting is that despite all these advantages, why did drop-shipping have such a big downfall? Well, there still exists a very large variable on which the business depends largely on- human gratuitousness. This means that at times, when circumstances change, this can have an effect on an individual’s behave despite the circumstance not having a direct relationship with the behavior, meaning that due to the severe epidemic and the stay at home order, individuals may refrain from making extravagant purchases to assure them protection financially. This is probably one reason why the market has not been so great for drop-shippers.
