C O N T E N T S
Introduction .................................................................................................................................... 3
Five Golden Rules to Dropshipping................................................................................................. 4
Select Products You Can Sell 4
Start Sensibly 4
Choose Your Dropshippers Wisely 4
Take Care Of Your Customers 5
Handle Your Business 5
Starting a Dropshipping Business ................................................................................................... 6
Things to Consider .......................................................................................................................... 8
The Advantages and Disadvantages ............................................................................................. 10
How to get Started ........................................................................................................................ 12
How to Find a Reputable Dropshipping Supplier.......................................................................... 13
Selling through an eBay Store....................................................................................................... 14
Conclusion ..................................................................................................................................... 16
I N T R O D U C T I O N
Drop shipping is a type of specialty retailing where sellers take orders from customers and, instead of fulfilling them directly, forward them to wholesalers.
The wholesaler is responsible for “drop” shipping the product to the customer. The customer pays a retail price to the seller, and the seller pays the wholesaler for the product and fulfillment service.
A dropshipping arrangement can be particularly advantageous for a new retailer because it eliminates many of the costs of retailing such as the purchase, warehousing and shipping of the products being sold. Instead it allows the retailer to concentrate on their strengths: selecting useful products, marketing them, and maintaining the customer relationship.
Wholesalers and manufacturers like this type of relationship too. Traditional engagements force wholesalers to rely on a small number of retailers who can afford to place bulk orders. Drop shipping takes advantage of the wholesaler’s investment in inventory, warehousing and shipping. For an incremental increase in shipping effort, wholesalers gain access to a much larger sale sforce and greater array of consumers.
And then there’s the customer. When drop shipping is done well, the customer is unaware of the fulfillment system and is just as satisfied as they would be ordering from a retailer who carried their own inventory.
This eBook will give you the background you need to overcome the challenges of starting a drop shipping business and strategies to make it successful.
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D R O P S H I P P I N G : F I V E G O L D E N R U L E S
If you want to ensure that your dropshipping business is profitable, there are a number of things to consider. In this chapter, we’ll outline five golden rules to ensure that you can help
your business become successful.
S E L E C T P R O D U C T S Y O U C A N S E L L
In order to make your business as profitable as possible, you need to find appealing, reasonably-priced products for which there isn’t a lot of competition.
Gifts are a good example of an in-demand product since customers have several occasions they need to buy them for. Sourcing unique gifts will give you a marketing advantage over other companies.
If you’re considering selling products that are similar to another retailer’s make sure you can locate a source at a cost that will allow you to make a reasonable profit while still charging a
competitive retail price.
S T A R T S E N S I B L Y
Since you don’t have to carry inventory, it can be tempting to sell every product a supplier is willing to dropship.
But when you’re starting it’s best that you only sell a select few as this will help you concentrate your marketing. Choosing a small number of related products that appeal to the same type of
customer allows you to focus your efforts and lower your sales cost.
C H O O S E Y O U R D R O P S H I P P E R S W I S E L Y
The sale isn’t over when the customer hands over the credit card and you forward the order to the supplier. The accuracy and speed with which the supplier fulfills the order can make or break your customer relationship.
Because of this, it’s important to select reliable dropshipping firms. Dropshipping’s popularity has caused an explosion in the number of companies providing the service. Weeding out unnecessary, unreliable and expensive middlemen is key to providing good service to your customers while allowing you to make a profit.
One of the best ways to find reputable dropshippers is consulting respected directories like
“Chris Malta’s Worldwide Brands.” His directory and others provide you access to legitimate and reputable drop shippers..
T A K E C A R E O F Y O U R C U S T O M E R S
Unfortunately, not all the hassles associated with running a normal retail business can be eliminated from a business that is run online
You will still need to deal with back orders and returns. There will also be times when a product your customer has ordered is not in stock. Communicating well with your suppliers will allow
you to anticipate these problems, and keep your customer informed when they arise.
H A N D L E Y O U R B U S I N E S S
Finally, it is important that you treat your online business just like any other business.
Market to customers ethically (no spam) and respect their contact preferences
Maintain a professional web appearance that creates confidence in your customers and avoid free web addresses
Comply with federal, state and local business registration requirements
Obtain any necessary permits and pay sales and income taxes
S T A R T I N G A D R O P S H I P P I N G B U S I N E S S
If you’re looking for a great opportunity to run a business from home and low startup costs, then a dropship business is probably the answer for you.
Not only can you run this type of business from the comfort of your own home, but you won’t have to worry about keeping large amounts of inventory in stock and won’t have to worry about getting the products shipped to your customers. You can also run this type of business while working in your normal day to day job. And when the business takes off, you’ll have the option of being a work-from-home mom or dad.
To get your dropship business started, you’ll need an online location to sell your products:
either your own website, or you can sell your products on eBay.
You’ll also need a way to accept electronic payments – it can be as sophisticated as a credit card merchant account or as simple as PayPal.
When an order is received and paid for by a customer, you send the order over to your dropship supplier and they send the order directly to your customer while you still make a profit.
SELLING WHOLESALE DROPSHIPPER’S PRODUCTS GENERATES TRUE PROFITS BECAUSE YOUR DROPSHIPPING PARTNER IS NOT COMPETING BY SELLING THOSE PRODUCTS TO THE GENERAL PUBLIC THEMSELVES.
If you searched the web today, you’d be amazed at the number of people who are making money through a dropshipping business. There many people doing it part time in order to earn a little extra cash to provide themselves a better standard of living and some who are earning a
Remember this: If it costs you $150 per month to run your online business, you really only have to sell two or three products per month to turn a profit. It’s that easy!
The great thing about setting up a dropshipping business is you do not need any special skills to get it started. All it takes is a computer with an internet connection and a person willing to dedicate their time to ensure that the business succeeds.
Once you decide to set up a dropshipping business you must form a good relationship with your dropship supplier. Then you can start selling their products online, either through your own website, or on one of the many auction sites like eBay.
All you need to do is find a product that you feel people will buy, find a reputable dropship supplier, and then start advertising the product on eBay or on the Internet. Without advertising, nobody will know about your business. By using this method, you will find it costs very little in order to get your business up and running.
As with any business, you should ensure the products you are supplying are of the best quality possible, and also provide great customer service. For example, if you’re selling products through an auction site, then make sure you stay up to date on your auctions and address your customers’ questions and concerns quickly.
T H I N G S T O C O N S I D E R
As you will soon discover, dropshipping is an extremely effective business model for anyone who wants to start an online retail business.
Unfortunately, many people who do not really understand what dropshipping is about and 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. Let’s take a closer look at the things you should consider before you decide to proceed with seting up a dropshipping business.
You need to carry out plenty of research with regard to dropship sources. It is best if you treat search engines with caution while doing this, as they tend to offer lists of the less reputable companies around, an often provide pages of worthless links.
Avoid companies that offer low profit margins. Low profit margins or commissions usually mean one of two things: 1. Your supplier is competing with you by selling directly, or
2. Your supplier is actually a middleman claiming to be a wholesale dropshipper.
Ensure the dropshippers you are considering require a valid reseller’s or tax ID certificate from you. Many of the companies that are willing to do business with an illegal business are middlemen who forward your order through to the wholesale company and take a cut of the profits that you are trying to make.
The best way to find a legitimate dropshipping company is as follows:
If you have seen a product you are interested in selling, contact the company manufacturing company directly. Enquire if they have an existing dropshipping facility or would be willing to work out a dropshipping arrangement.
Look through directories that only deal directly with legitimate dropshipping companies, like WorldWideBrands. Such directories offer you an extensive searchable list of products, and the companies that supply them. If you’re looking for a way to save yourself time searching for quality products and reliable suppliers these directories can certainly speed things up.
Once you’ve located a company that offers dropshipping service, you will should get a valid reseller certificate so you are eligible to receive wholesale pricing. The exact requirements to obtain this certificate will vary from state to state.
You’ll then need to contact the dropshipping company and set up an account with them. Because your business is new, and you won’t have any supplier references you will likely 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.
don’t be fooled by those sites offering you a dropship directory for a fee (normally around $5 to $15). Unfortunately, these are normally out-of-date copies of the more legitimate lists provided by reputable directories.
Now that you have found your products and you made arrangements with the dropshipper, it’s time to get your sales website up and running.
T H E A D V A N T A G E S A N D D I S A D V A N T A G E S
Although dropshipping is very popular among retailers and has many benefits, it may not be the best option for every business. In this chapter we will take a closer look at some of the advantages and disadvantages of running an online business.
If you’re just starting out and don’t have much operating capital, then dropshipping can be a sensible option. The great thing about this particular type of business is that you don’t need to purchase vast stocks of the products that you are selling. Instead, this is all done for you by the dropshipping supplier. This eliminates a significant cost to get your business up and running. Because you’re not holding any of the inventories yourself, you don’t need to pay for storage facilities either.
The sales website can be produced very quickly enabling you to start selling faster.
Because a myriad of products are available for dropshipment, you can easily diversify what you sell to your customers.
Now let’s take a look at some of the disadvantages to dropshipping.
First, as you do not own the inventory that you are selling you may not have control over how the product is packaged. Also, you may not be able to include any coupons or offers in to the package which can help build customer loyalty and generate return business.
Each dropshipping supplier will have a different fee structure. This, in turn, will affect the profitability of selling their products. Do enough research to determine if you can make a profit without charging a price the customer is unwilling to pay.
Because you are only ordering one item at the time rather than bulk amounts, you will not expect to get the same level of wholesale discounts.
Many suppliers can integrate their inventory into your website, but may also charge a fee for this service.
One notable drawback is not all manufacturers support dropshipping. There are other companies who will only supply in bulk quantities. Either of these situations might affect your ability to offer an interesting product.
However, when dropshipping is available it can solve many more problems than it creates.
H O W T O G E T S T A R T E D
It really is easy to get your dropshipping business up and running. The main pieces of equipment that you will need are a good computer, and a good internet connection.
These are the steps that you will need to take in order to get your dropshipping business up and running:
1. Set up an online shop, either using one of the many online shop builder programs available, by building your own site, or setting up an account with an auction site such
as eBay. (if you choose to use eBay as your primary selling place, I recommend getting a good auction template that you can simply plug your information into to save time).
2. Find your wholesale supplier who has the product that are looking to sell, and who offers a dropshipping service.
3. Once you have found the company that you want to deal with, open an account with them.
4. Start building your site, using both content and images that the dropshipping supplier has provided, or that you have produced yourself.
5. Set up a system on your site so that you can take payments from customers and are notified when an order is placed.
6. Pass on the details of the order directly to your dropshipping supplier. Once they
receive the order, they will bill, and then they will arrange for the item to be dispatched. A good dropshipping supplier will provide labels or materials which refer to the business or website where the order has come from, rather than from their own business.
H O W T O F I N D A R E P U T A B L E D R O P S H I P P I N G S U P P L I E R
One of the best ways of finding reputable dropshipping suppliers is contacting the manufacturers or wholesalers of products directly, and asking if they operate a dropshipping service.
Another way to find suppliers is through the internet. Search using the terms “drop shipping”, “dropshipping”, “drop ship” or “dropship” and include with this the product that you are interested in. Normally by doing this, you will find good results.
Also, take a look at some of the sponsored links that you find in the results search pages returned by sites like Google and Yahoo. These will often give you a good idea of some of the more up-to-date dropshippers that are around.
Join a dropshipping forum, and there you will be able to chat with like minded people who can provide you with details and information on the best dropshippers for a product that you are interested in.
Then there are dropshipping directories. These are probably the easiest way to find suppliers. However, it is important that you only use the more reputable ones such as WorldWideBrands or Drop Ship Source Directory.
Even after you find a good dropshipping company, you may encounter a cost barrier. There are some companies which will charge you a monthly membership fee costing hundreds of dollars, and there are others which require you to have a business license before you can apply for membership. Keep in mind that dropshipping companies have bills to pay, also. So, it is important to find one that truly does support you in your business. Whether that is support in advertising, marketing or any other areas of your business that will help you stay in business.
Also, there are many people around who think that dropshipping is a scam, and this is simply not true. Again, there are a few companies who are willing to exploit us, but these are in the minority rather than the majority. If you were to look closely at this subject, you will find that more than 1.1 million people around the world have been able to utilize dropshipping effectively in order to earn an income.
S E L L I N G T H R O U G H A N E B A Y S T O R E
Lots of dropshipping retailers have success selling their products through eBay stores.
An eBay account gives you access to millions of potential. In this chapter, we look at just what you need to do in order to get your dropshipping business up and running on an auction site like eBay.
As previously discussed in other chapters of this book, you need to find yourself a reputable and reliable wholesale company that also provides a dropshipping service. Once you’re satisfied with what the supplier is providing and have an account set up with them, you can move on to the next stage: signing up with the auction site of your choice.
When setting up an auction item, you should ask your dropshipper to provide you with stock images that you can use, along with descriptions of the item It’s important to list your items in the correct auction category, and to price them competitively. It’s also important that the product description helps it stand out from that of your competitors.
A great way of doing this is to look at a few of the power sellers on these auction sites, see what products they have listed and how they are set up. Also, be sure to price your products appropriately to account for any handling and auction fees. If you have minimum auction bids, set them well. Certainly, if you find that the winning bid is much lower than you expected, you can soon find yourself losing money rather than making it.
As an alternative to offering your items at auction, you can set yourself up with a store, such as an eBay store. This can certainly be more cost-effective because the fee for listing items in this way is much more affordable. However, one disadvantage to this method is that your store may not get the same sort of exposure as an item that you have put up for auction. But if you are really clever, then you can utilize both of these methods in order to bring more customers to you.
It’s important to provide great customer service regardless of whether you use the auction or store model. If you provide quality service, you will start to see an increase in customer satisfaction and repeat business.
Also, eBay has a great email marketing feature, which means that you are able to email all your repeat customers who have decided to opt in to your email list with just a click of the mouse.
As you can see, setting up a dropshipping business using an auction site such as eBay can be very painless indeed. However, it is vital that you research your product thoroughly, as well as finding a reliable and reputable dropship supplier.
C O N C L U S I O N
Setting up a dropshipping business is an excellent way to get started with an online business, and if done correctly, should not be an expensive project.
As you will soon discover, there are hundreds of companies willing to dropship products for you. From household items, to power tools and furniture, the choices are immense.
Certainly, dropshipping will offer you many advantages if you are only starting up an online business with very little or no capital. One of the main ones being that the product you are selling does not need to be paid for until it is actually sold, and as you are paid for it by the customer, then the outlay you make to the dropshipper supplier is nothing. You also don’t have to worry about storage and handling costs, as this is all covered for you by the dropship supplier you are using.
Plus, by setting up a site where your goods are supplied to you by a dropship supplier, you can offer a much wider variety of items, from a number of different suppliers, and your customers will never know the difference.
Like any business, there are are risks with using dropship suppliers. But by doing adequate research you can mitigate these risks and start an exciting business with minimal investment of time and money!
To You Success: