January 21, 2017 By Suzanne Robertson

It isn’t always easy for a small business to get started. Fledgling small businesses lack the buying power of their larger competitors, which means that small businesses are paying suppliers higher prices for their goods.

See if you pre-qualify

This translates to higher prices passed on to customers, and lower profit margins for small businesses. With large businesses covering so much of the market, and enjoying competitive advantages such as these, how does a small business compete in today’s economy?

There are actually many ways that a small business can effectively compete. Thanks to innovative technology and online sales, many businesses are using outsourcing tactics like dropshipping to cut their costs and deliver a comparable service. According to Get Busy Media, online outsourcing is growing rapidly among small businesses, allowing increasingly lean operations and new opportunities. In this article, we’ll go over how a small business owner can take advantage of a practice like dropshipping to become more competitive.

What is Dropshipping?

Dropshipping refers to a supply chain management method in which the retailer refers a customer’s orders and shipment details directly to a manufacturer, another retailer, or wholesaler for order fulfillment. The retailer doesn’t have to keep goods in stock or operate a storefront, leaving them to concentrate on sales and maintaining a web page.

With dropshipping, you essentially help the manufacturer or wholesaler find an audience for their products and mark-up the price of the goods to account for your services. For example, if you want to sell industrial cleaning supplies, you strike up a relationship with a manufacturer or wholesaler who has these supplies, build a website to sell to them with, and then refer all of your orders to that manufacturer or wholesaler to ship products directly to the customer.

How Dropshipping Can Help

There are several ways that dropshipping can make your business more competitive. First of all, it greatly lowers your operating costs. There is no need to rent a storefront or a warehouse, and you don’t have to worry about running and maintaining a physical location. You also don’t need as many employees to run the business. There are even dropshippers who are the only employee in their business, and many of them do just fine.

Also, you don’t have to purchase a large amount of inventory to get started. Basically when a customer orders a product, that product ships right out from the warehouse or wholesaler. This cuts down on costs, greatly lowers your risks, and allows you to be more flexible and nimble. If you don’t have to buy a large amount of product and commit to it, you can focus on selling the hottest items as the market changes.

This is a great way to start small and lean, and if your business takes off, everything is completely scalable. More orders coming in simply means more products being shipped out by the suppliers.

Making Small Businesses More Competitive

As you can see, dropshipping is a great way for small businesses to compete in the global marketplace. This practice is not easy though. There is plenty of competition out there, and profit margins will probably be low for some time. You also have to find good, reliable suppliers and build up those relationships. However, if you have a good website and a sharp eye for popular niche goods, you can do very well in this field.

Author Bio: Carl Turner is a freelance business writer who has a background in the wholesale supplier and logistics industries. Carl has started several of his own businesses in the retail industry, and he loves to share his knowledge through his writings.

Do you need extra funds for your small business? An SBA loan is the best bet for small businesses with low rates, long terms and low monthly payments. Visit SmartBiz today and discover in about five minutes if you’re qualified for an SBA loan.

See if you pre-qualify