When starting your own business it is easy to get wrapped up in all the excitement of your new venture, however, it is important to slow down and make sure that you have every aspect of your journey planned out. Once you’ve decided on what product your business is going to sell, the next important step is to decide where and how you store your product. There are various different dropshipping platforms which can help you decide what kind of system would work best.

This article will be arguing for why your choice of warehouse is important, as well as weighing up the benefits of having a Warehouse in the US.

What is dropshipping?

Traditional businesses tend to bulk buy large quantities of particular products so that they can have the products immediately available when a customer wants to buy them. Leftover product from this bulk purchase that hasn’t been sold is often used in sales in order to get rid of said leftover stock.

That’s where dropshipping comes in. Dropshipping eliminates the necessity for sales, and therefore a loss in profit. This is because businesses don’t bulk buy or carry unnecessary products. When a business is built around dropshipping the business acts as something of a ‘middle-man’ in the purchasing process. A customer will order a product from the business at its retail price, the business will then seek a third party to purchase said product from at a wholesale price, and the product will then be delivered to the customer. This cuts out any unnecessary storage on surplus stock for the business and saves money that would have been spent on additional storage.

What are dropshipping warehouses, and why are they important?

Although dropshipping cuts down on the amount of space needed for the products, as you only hold what is necessary at the time, a warehouse is still needed for your business. The Warehouse will act as a site of operations for your company, and is where you can store the purchased products until they are ready for transportation. It also allows for a distinct location for quality checks and packaging. The amount of businesses using Warehouses has increased in the last few years and looks like it will continue to do so in the years to come.

While it is possible to manage a dropshipping business inside of your home it is not advisable as there would be limited space as well as a lack of a distinct work-life balance. Warehouses also provide a safe place where the products are less likely to be damaged or lost.

Why should I use an American Warehouse?

Initially you may ask yourself ‘Why should I get a Warehouse in the US when all my products are coming from Asia?’ While this is a good question but the benefits of a US Warehouse vastly outweigh the negatives.

The most beneficial reason for having a warehouse in the US is that it dramatically cuts down on delivery times. Ordering products from Asia can take upwards of a week - sometimes even up to a month depending on the product. By having your warehouse based in the US it would only take a few days for items to reach your customers. Customers are often turned off by long delivery times, so by being able to offer faster delivery you are not only setting yourself apart from your competition but also attracting a bigger consumer base.

Additionally, when products are shipped from a country in Asia their packaging will often have writing on the shipping label in that country's language. There is the stereotype that products ordered in from Asia are often cheaper and lower quality than something ordered directly from a major company in the same country as the consumer. As a result, by being able to make sure all packaging is in English, you are diminishing any prejudice there may be against your products.

A potential negative there may be is that there’ll be more of an upfront cost in procuring an American warehouse, as your business might not yet be fully off the ground. However, the faster delivery times and reliability of your products will mean you’ll quickly gather a set of loyal customers who trust your business, and you will make your money back.

To account for the delivery time from Asia to a Warehouse in the US, you may need to keep a small amount of product on hand to keep the delivery times low. With careful planning and good stock management, this should be a non-issue, and will also allow you to see which of your products are doing the best, as these are the ones you’ll have to reorder the most.

Conclusion

If you are an American company that dropships products you should consider having your warehouse based in the US. Although there may be more of an upfront fee, that will quickly become negligible by the ease of delivery and trust your customers have in your business.

Faster delivery times will make your business preferable to other sites with longer times, and will also help you grow your consumer base when your customers see you as a reliable business.