Hey guys, Sam here from keycommerce.com.
And today you're going to learn
the different types of e-commerce businesses.
Let's go.
(joyful music)
Here they are
dropshipping,
3PL and shipping the products yourself.
Okay, now these are all fulfillment methods,
they are just ways to get your products
into the hands of your customers.
I'm going to go through each method right now,
but something to really emphasize
is that these methods don't really matter too much.
At the end of the day,
your customers get the product.
I think a lot of new e-commerce store owners
get caught up in whether to do
drop shipping, print on demand
or what have you.
The truth is the fulfillment model
doesn't make as much of a difference as you think it does.
A dropshipping store isn't going
to be more successful than a 3PL store,
just because it's dropshipping.
Successful stores are successful
because they really understand their customers,
they sell a great product that's valuable to those customers
and they have found a way to profitably
get those customers through their buying process.
Let's look at the first one, dropshipping.
This is where you list the products on your website,
but then the supplier is the one
that ships them to your customers.
So a customer on your site places an order,
you get their customer details
and you just send an email off to your supplier
and they ship it directly to the customer.
This is a great way to quickly
test out your customers and your products
without needing to purchase the inventory yourself.
You also don't need to stock the products yourself
because your supplier takes care of all of that.
The problem here though,
is that you have less control over the buying experience.
The supplier might mess up the order,
they might keep their own labels and branding
on the packaging, maybe even by accident.
the customer might see that it's not being sent
from where your actual company is.
It's also hard to deal with returns as well,
so it can be a really bad buying experience,
but you can do it.
Honestly, I've worked with a lot of drop shipping stores,
and the ones that are successful
are the ones that are much more hands-on
with their products.
They find a way to white label with their supplier
and they're very careful about which suppliers they use.
A lot of people just start
with dropshipping to start with,
validate their customers and their product.
And then later swap into a 3PL model,
or fulfill the products themselves.
This gives you much more control
over the shipping and unboxing experience,
while also increasing profit margins.
It's a bit more risky than just dropshipping
because you have to hold inventory.
But if you've already validated your audience
and your product, then it can work really well.
So that brings me to our next method, 3PL,
this stands for third party logistics.
This is where you buy the inventory
and ship it to a warehouse,
where a different company
takes care of managing that inventory
and shipping it out to your customers.
So when an order comes in for your store,
that gets sent to the warehouse
and they ship it out to the customer.
I've worked with a lot of stores that do use this method
and it can work really well, but sometimes it sucks.
It's really important that you find a good 3PL company,
and you get references for that company
to make sure that they're going to do a great job.
I know a bunch of different e-commerce stores
that have had to shop around with different 3PL companies,
because they had bad experiences for their customers.
Orders were wrong, shipping was late,
the customer received the wrong product.
Or, they couldn't do any customization
of the packaging or the shipping.
But the advantage is you don't have to
rent out your own warehouse,
or deal with having to manage all the employees
that make the shipping and logistics work.
So you can easily run your e-commerce store remotely
and have someone else deal with all the logistics.
This can be amazing.
Just make sure you find a good company
and you keep a close eye on the quality control.
The worst thing that can happen
is that you find out that your 3PL company
is really low quality, they keep messing up orders
and you've already shipped them five pallets of products.
This means that changing warehouses and 3PL companies
is much harder to do.
And the next method, da da da,
is shipping the products yourself.
Of course, this is where you get the products
shipped from your supplier to your own house or warehouse,
and you ship them out to your customers yourself.
A bunch of my clients do this,
and it allows them to really maximize the profits,
as well as ensure quality control of their products,
shipping, unboxing experience for their customers.
It also means that they can ship out orders
(clicks) really quickly.
And it also allows them to
add little notes and things inside the box,
so that it can add a better experience for their customers.
The stores that I work with that do this,
they're the ones that have the most repeat customers.
But that's because they take advantage of the fact
that they have more control over the product.
They ship quickly
and they're much more responsive to customer queries.
It's also much easier for them
to chase up an order that may have been lost,
because they can just go down to their warehouse.
It also makes it much easier to customize the packaging.
They can also add in thank you notes and things like that,
to make the customers happier.
Dealing with 3PL or dropshipping
can be much harder in this regard.
Though, remember, this method does take
a lot more management of employees and the whole process.
You need to hire people to work in the warehouse,
and you need to deal with the shipping companies yourself.
If you grow your store
you might also need to expand your warehouse
to deal with the massive demand,
and all the employees you need.
All right guys, that's it for today.
If this video was helpful,
please give it a thumbs up and tell YouTube
that I'm making good content for you guys.
If you have any questions or feedback
leave it in the comments below.
And if you haven't subscribed yet
please hit that subscribe button,
and follow along as you grow your own store.
Thanks so much for watching this video guys
and I'll see you in the next one.
Bye for now.
(joyful music)