Drop shipping has become a hot topic in business. An increasing number of people are looking toward working online and setting up an internet-based business. From crowdfunding, to blogs, to Amazon or Shopify, drop shipping currently offers one of the best ways to make some serious cash online.

What is drop shipping?

Drop shipping is a business fulfillment model whereby a customer orders a product from an online store (owned by you) and the original manufacturer fulfills this order.

With drop shipping, you never own any inventory. You just make the inventory available via an eCommerce store.

To understand how this works, think of an example:

When a customer finds your online store on the web, they might order a trendy computer gadget that you advertise. You could advertise this gadget at a price of $200, but it might only cost $150 for you to purchase it from the manufacturer.

When you buy from the supplier, the supplier ships the product directly to the customer.

In other words, you are acting as a middleman between the supplier and the customer, and you are earning a profit for this.

The profit is the difference between the price the customer pays you and the price you pay the supplier to fulfill the order.

Why is it a good business model?

There are many reasons that drop shipping is a lucrative business model that works.

Here are three of the most important:

1. Minimal initial investment.

This is one of the most fundamental advantages of running a drop shipping business.

Cat in a Bag

If you wanted to start up your own computer gadget shop in your neighborhood, there’d be a lot of costs associated with it.

Rent and inventory are two of the prime expenses needed at the outset when opening a traditional retail outlet.

Since you don’t own the inventory in a drop-shipping business, you’re already reducing initial investment to almost zero.

And since you’re selling the product online, rent isn’t an issue. This is why absolutely anyone can start up a drop-shipping business.

Once the ball is rolling, you’d be surprised at how quickly you can earn a lot of money.

2. More emphasis on marketing.

Running your own physical business is a tough job. There’s lots of manual labor involved that loses valuable time you could spend on marketing. Since the entire order-fulfillment process can be automated, drop shipping offers a unique opportunity for business owners to focus on marketing their brand from the outset.

With less time spent stacking shelves and more time spent advertising your business and spreading the word, the profits will roll in faster than you ever expected.

3. Sell a broad range of products.

Traditional retailers are constrained in what they can sell by their individual budgets. With drop shipping, the fact that you never own any inventory means you can offer as many products for sale as you feel necessary.

The scope of products you can sell in a single drop shipping store is an order of magnitude much greater than in traditional retail. This allows you to tap into different niches and figure out which ones are the most profitable.

The opportunity to strike gold and offer an in-demand niche product is there. If this happens, you’ll soon be seeing dollar signs in your eyes.

So there you have it, three great reasons that drop shipping is one of the most popular ways to make money online today. So what are you waiting for? Get out there and read all you can about how to set up an online store.

Be careful, though. There are no free lunches in life–you’ll only succeed in the drop-shipping business if you put in the same level of hard work you would with any other form of business.