From the course: Shopify Essential Training

Explore shipping models - Shopify Tutorial

From the course: Shopify Essential Training

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Explore shipping models

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- [Presenter] Before we talk about how to cost effectively ship a product, it's worth thinking about the model you want to use. In the shipping world, there are three models that you can use to ship products. The first is you can ship products yourself from your home, office, or warehouse. The second is you can drop-ship products from a third party. And third, you can use a fulfillment network or 3PL to ship products for you. The most obvious way is to ship products yourself from your home, office, or warehouse. When you receive an order, you figure out how to pay for it, which we'll cover later in this chapter, and then you drop it off or have a shipping company come pick it up. The pros are you keep as much margin as possible. The cons is it takes time and space, both to store as well as ship the product. Drop-shipping is another way to ship packages. That's when a company will let you place orders for their products and they'll ship them out on your behalf. As an example, I use drop-shipping on my own site in conjunction with a print-on-demand company called Printful. I designed a poster that I have in my own room, and I thought I might as well put it up for sale in case someone else wants it. What's nice about drop-shipping is I don't need to buy hundreds of units of inventory and keep them on-hand. I have zero inventory. When someone purchases the poster, my e-commerce platform sends a notification to Printful to print and ship the product, and I do nothing. The two big pros are not having any inventory and not using any storage space. The cons are you have to pay the third party to fulfill the packages for you, and you can only sell what someone lets you. If someone doesn't make a product you want to sell, you obviously can't use drop-shipping. Third-party fulfillment, or 3PL, is the third model that you can use. If you don't want to handle the storage and fulfillment part of the business and you have your own products, you can actually outsource this. There are companies that will store and ship your products for you. The best known is Amazon's fulfillment program, called Amazon FBA. You can ship your products to Amazon's warehouse and they'll automatically pack and send all of your packages. They'll do this not just for the products listed on their site, but also the products placed on your website. It's a convenient way to outsource this time-intensive process so you can work on the business. This of course, eats into your margins, but you save so many hours packing and shipping that it can be powerful and worthwhile. Shopify recently announced their own fulfillment network which started rolling out in 2019. This makes it much easier to set up and manage. So if you were on the fence about fulfillment before, it's worth checking out the Shopify Fulfillment Network to see if it's right for you. And if you like Amazon FBA, you'll like this service because they copy some of the best points, such as the two-day delivery, no storage space needed, you can work from anywhere, and the only con is you have to pay for the 3PL. There's a great calculator which gives you rough cost based on how much your item weighs. And just comparing this to USPS, it is cheaper for me to ship the products myself, but by only $1 or $2 per order. So with (indistinct), I can decide if it's worth spending $1 or $2 per order so that I don't have to be available to ship the products promptly every time someone places an order. As you can see, there are a lot of models when it comes to shipping, and they all have their pros and cons. For a new store owner, you might want to start by shipping the products from your home, and then explore other models. If your store takes off, definitely look into the Shopify Fulfillment Network. It can save you a lot of time and it's super integrated into Shopify, so it's not hard to set up or manage.

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