Another great way to be successful online is to start a dropshipping business. Using drop shippers instead of buying wholesale in bulk is a very inexpensive way to get an online business up and running. You can do it with very little startup costs because you don’t have to worry about stocking up on inventory. With drop shipping, you are selling products without actually having them in your possession.
How does drop shipping work?
You sign up with a drop shipping company and choose which of its products you want to sell.
These products are brand name and new from the manufacturer. You’ll be given a price per item, usually slightly higher than the buy-in-bulk wholesale rate, but still cheap enough for you to make a sizable profit.
The drop shipper supplies you with everything you’ll need to promote the product efficiently, including various images and specific details.
You list the item for sell using the photos and details you were given. When the item sells, you send the order to the drop shipper and they pack up the item and ship it directly to your customer.
The customer usually never knows that there was a third party involved. All communication is between you and the customer, or you and the supplier.
Of course, just like everything else, there’s good and bad with choosing to run a drop shipping business.
The pros and cons of dropshipping:
- You don’t need startup inventory money. Buying up a lot of inventory that may or may not sell is a common way startups go broke. With drop shipping, you can get your feet wet with new and different products without having to commit to any one product. Not having to invest in a lot of inventory equals less risk for you.
- An affordable way to sell high-quality items. Drop shipping makes it possible to sell those designer handbags that you’re so familiar with, because you’re not forced to dish out $5,000 for a lot of up-front inventory.
- You don’t need a physical store. You really don’t even need your own website. You can sell on other sites, like Ebay and Amazon, and piggy-back off their already-established customer base. In fact, most Ebay PowerSellers use drop shippers for their business.
- You don’t need storage for inventory. Even more importantly, you don’t need to keep track of a bunch of inventory!
- You can sign up for a wholesale directory like Salehoo who brings everything you’ll need directly to you, including an Ebay storefront and list of legitimate drop shippers.
- Less work for you. No inventory to keep track of, or packages to prepare and take to the post office daily means you can spend more time listing and selling.
- Just like anything else, there are a lot of scammers out there posing as dropshippers. Even when you find one that gets great reviews, you have to dig through its products and prices to make sure that they aren’t priced higher than they are actually selling for on Ebay, as this is a common occurrence. You should always take a good, thorough look around even the most recommended drop shipping companies. There are a few great wholesale directories that screen all of these companies for you and can tell you with certainty who’s legitimate and who you should avoid.
- Relying on a third party to ship the right item to the right customer. There’s a lot of variables in the entire process that could go wrong, and it probably will on occasion. But it’s your storefront, so it falls on you. The customers usually won’t even know there’s a different company shipping the item, so you’ll have to do the explaining and accept the negative feedback, if it happens. However, these drop shipping companies need to prove themselves just as much as you, so the good ones will go out of their way to try and get it right every time.
- Shipping delays. There’s a delay in the process that could put a hamper on your promised shipping times. After you make a sale, you need to place your order with the drop shipper, and then wait about a day or so for confirmation that they received your order. Then they’ll usually get it shipped within a day or two from that point. So all-in-all, there is a very possible three day period where nothing is being shipped. You would just need to be realistic in your promises to your customers about when they can expect their items in the mail.
- Slightly less profit compared to what you get with wholesale rates. With wholesale, you’re getting a much better deal because you’re buying in bulk. With dropshipping, you’re not getting quite as good cost-per-item rate. It’s best to consider this little extra as your storage and shipping fees.
Before you start a dropshipping company, find out the answers to these important questions:
- Do they charge a membership fee?
- Do they charge a fee for each item sold or shipped?
- How do they handle returns or exchanges?
- How quick do they ship orders out?
- What shipping methods do they use?
- Do they have their own store selling the same products? ..
- Are their product prices considerably lower than the selling prices on Ebay and Amazon?
How do you know which drop shippers are scams?
Always assume they are, then try to prove otherwise. There are more scams than there are true, legitimate drop shipping companies.
You must do a thorough search on the company. Check out user reviews, and then go through their product’s prices, making sure that they can be profitable.
Verify that the company you’re considering is not selling its own products out in the market somewhere. A business selling its own products should not need to wholesale them out to resellers.
Do you have to pay a membership fee with a drop shipping company?
No, you shouldn’t, so please don’t. Stay away from those drop shippers that want to charge you a monthly membership fee. You should not be charged by the company itself for wanting to do business with them.
Keep in mind though, that you will find wholesale directory companies that might charge you for their list and screening services, if you choose. This does not mean that the drop shippers on their list are scammers, in fact, a directory is likely where you’d find your best options.
Where can I find a drop shipping directory?
There are companies whose entire business is digging into all of the available drop shippers to find out who’s legitimate. They sort through them to find the best, and weed out the scammers.
Salehoo is the best deal. This directory has 8,000 verified, legitimate wholesale and drop ship suppliers, and more than 1 million products to choose from. This may sound intimidating, but you narrow these results down according to your chosen niche or the types of product you want to sell. They also offer additional tools, such as help with creating your own online storefront. You can check out Salehoo for free with their trial offer. Afterward, its cost is $67 per year. Salehoo offers a 60-day money back guarantee.
Doba has a much smaller directory, but they might be a little more popular among Ebay sellers, as they’ve been around a lot longer. What is great about Doba is that they are so confident in their chosen suppliers, that they promise to refund two months worth of your membership fees if you find any product priced lower than the wholesale price you’re getting. Doba offers a one week free trial as well, and afterward it will cost you $59.99 a month to remain a member. This company also offers a money back guarantee.
When you’re ready to start selling, check out these tips for selling on Ebay.
Are you a business with good tips for dropshipping? We’d love to hear them. Leave a comment..
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