How to dropshipping

What is drop-shipping?

When a manufacturer, wholesaler, distributor or importer, after receiving an order from their retailers, individually pack and deliver the product to the customer of the retailer with retailers address as shipper, this selling technique is called drop-shipping.

The advantages of drop-shipping include:

You do not have any inventory. So, there is no stock carrying expense involved.

You pay for the item only when it is sold and you got paid from your customer. You don t need to invest money in buying the product.

You can sell just one item at a time. No minimum quantity required.

Your drop-shipper will supply you with necessary product image and specification. You don t have to spend money on creating your own.

You fix your own selling price of the product. Convenient, when you know your niche market well.

You can offer various products on your web store from multiple suppliers.

Drop shipping is an extremely effective business model for anyone who wants to start an online retail business. You can either run it through your own website, or through some other outlet, such as an auction site.

However, due to this form of online business has become so easy to do, and because of its increased popularity, many prospective drop shipping businesses have become targets for the less reputable people online, such as scammers.

Unfortunately, many people who do not really understand what drop shipping is about only see it as a way of getting rich quick. Because of this, there are plenty of people out there who are ready to exploit them. In this article, we will look more closely at the things you should consider before you decide to go ahead and set up a drop shipping business for yourself.

1. You need to carry out plenty of research with regard to drop ship sources. It is best if you avoid using search engines when doing this, as they will also offer up a list of the less reputable companies around, as well as providing you with page upon page of links which are completely useless. However, once you have found a reputable source for the information that you require, and then the real work begins.

2. Avoid any companies which expect you to pay them an up front fee (membership or monthly). Also avoid those which offer you a fully featured drop shipping solution that provides you with a website and everything else that you need in order to get your business off the ground.

3. Ensure the drop shippers you are looking at require a valid wholesale certificate from you. You will gain this through a business license, so avoid any that don't have that requirement at all costs. Unfortunately, most of the companies which are willing to do business with an illegal business will usually be middlemen, who then send your order through to the wholesale company, and will end up taking a cut of the profits that you are trying to make.

The best way to find a legitimate drop shipping company is as follows:-

a. If you have seen a product which you are interested in selling, then contact the company producing it direct. Inquire if they have a drop shipping facility, and if they don't, then they are likely to be a light bulk seller. This means that they will only normally sell their products wholesale with a minimum of say around $200 or so (in many cases, the minimum number is much higher).

b. Another way is looking at such directories that have been set up and deal directly with legitimate drop shipping companies only. One such directory is Worldwide Brands. Such directories offer you an extensive searchable list of products, and which companies supply them. So if you are looking for a way to save yourself time in searching for good quality products to sell through your online business, then these directories are certainly the right way to go.

4. However, once you have found a company that does offer drop shipping facilities; you will need to get a valid reseller/wholesale certificate. Yet, what the exact requirements are in order for you to obtain this certificate will vary from state to state. But the minimum requirement for starting any drop shipping business online is that you have a business license.

5. Now you need to contact the drop shipping company in question and set up an account with them. Unfortunately, you may find that because your business is new, and you are not able to supply any references, then you may find that you need to set up a pre-paid account with them. Normally, this means that they will charge your purchases to a credit card instead of providing you with a line of credit. In order for this to be done, you will need to fill out a credit card form, an account application and provide them with your wholesale certificate. Once this has been received, they will then provide you with a wholesale catalog and anything else that you need in order to get your business up and running with their products.

6. Also, do not be fooled by those sites offering you a drop ship directory for a fee (normally around $5 to $15). Unfortunately, these are normally copies of the more legitimate lists provided by reputable directories, and will often be out of date. So really, you are better off going to one of the more reputable directories and paying them a little extra in order to get a regularly updated list.

7. Now that you have found the product which you are interested in selling, and you have made arrangements with the drop shipper in question, it is time to get your site up and running, or your account set up with one of the more reputable auction sites, such as eBay.