Stuck on taxes, rather than your customers?We’ll tell you how
Drop surfing is a specific supply analysis technique used by most dropshipping e-Commerce businesses. The strategy of drop surfing involves constantly evaluating all your vendor options. The goal is to increase profit margins per sale by selecting the cheapest vendor each time. The lower price could be a result of a cheaper product or cheaper shipping costs.
How does drop surfing work?
Business owners review — or “surf” — several potential suppliers for each individual product. Then they select whichever supplier is offering a lower price at that time.
The next time a customer buys the exact same product, the business owner may “surf” again and choose a different supplier who’s offering a deal, a discounted price, or a cheaper shipping option.
Benefits of drop surfing
The benefits of drop surfing are:
- More money! Higher profit margins, which are notoriously low in dropshipping business models.
- Flexibility in choosing a supplier that best fits the sale. You aren’t tied to a single vendor.
Drawbacks of drop surfing
Potential drawbacks of drop surfing include:
- Poor quality of products. Switching up your supplier frequently holds the risk that you may encounter poorer quality products than you’re used to.
- Complicated to track shipments. When various suppliers use various shipping methods, managing your orders in real-time gets confusing.
- Risking poor customer experience for your buyers. Wonky products or delayed delivery leaves you with disappointed customers and perhaps disappointing reviews!
- Consumes a lot of time. Scanning multiple vendors is a time-consuming manual process unless you use a tool.
- International tax such as sales tax, VAT or GST. You must comply with them on every sale.
Note: At Quaderno we love providing helpful information and best practices about taxes, but we are not certified tax advisors. For further help, or if you are ever in doubt, please consult a professional tax advisor or the Tax Agency.