If you are looking for a business that has a low start-up cost and allows you make a profit from things you don’t even own, drop shipping may be right up your street. All you need is a website and way to draw in a decent amount of traffic to make money dropshipping.
Your drop shipping partner will be the one who has to do most of the hard work.
Drop shipping is a marketing method that allows people to sell someone else’s products and retain a share of the profits.
A typical drop shipping partnership may consist of a clothing manufacturer with garments to sell and an internet marketer who has built a website that can generate sales.
The internet marketer may attract traffic via the search engines, by using pay-per-click marketing, or via referrals from other sites.
In many cases the ecommerce marketer will have skills, time, or resources their chosen drop shipping partner does not. The only thing they won’t have is their own products to sell.
In the case of a drop shipper who has partnered with a clothing manufacturer, their site will contain pictures and details about the products the manufacturer has available to sell.
The manufacturer’s price per item will be much lower than that charged by the person operating the drop shipping website. This may sound a little surprising at first, but you have to remember the prices charged in shopping malls and other retail establishments are always much higher than those of the manufacturer. That’s how stores make a profit. Manufacturers seldom sell directly to the public at large.
When a site visitor orders a product from the drop shipping website, they pay for it up front in the normal way.
The marketer then uses some of the money they have received to pay their marketing partner’s price and sends them the customer’s address and any other relevant delivery details.
So if for example, the marketer is charging customers $50 for a red knee-length dress, and the manufacturer’s price is only $25, the marketer will make a $25 profit on each dress they sell.
Unless they are using pay-per-click marketing, web hosting and their time is likely to be the only cost involved and, ideally, there should be no need to pull out any money up front. This is the great promise of the drop shipping model. Yet, it seldom is so easy…
The drop shipping business model offers many attractive benefits.
For one thing, the lack of the need to carry a stock means there will be no storage costs to pay.
Nor will there be a need to devote too much time to individual transactions.
All the important tasks, such as order picking and packing for delivery will be handled by the manufacturer.
Someone who is operating a conventional online store may need to invest more cash and order larger quantities of their best selling stock. Then, if the market changes, they may be left with a lot of money tied up in stock they can no longer shift.
On the other hand, if the online store miscalculates customer demand and runs out of a particular product, the customer may go elsewhere.
Drop shippers may have access to thousands of products but, unless they have made a bad choice of marketing partner, stock levels should rarely become an issue.
A Google search, using the term “drop shipping wholesalers” should return numerous results and more creative search terms, like “drop ship jeans” or “drop ship jacket” can be useful for populating a drop shipping website with specific products.
However, the companies that appear on the first few pages in the SERPs may not offer the best drop shipping prices or customer service.
So it is important to take a little time researching potential drop ship partners.
Drop shipping wholesale companies come and go all the time, so it is important to choose an established company that has a good reputation and is likely to be around for the long-haul.
A company that has been trading for 8-10 years is less likely to take your money and run than a company that has only been trading for 10 months and appears to have a problem meeting customer demand.
The Better Business Bureau may be a good, important first point of call because the company’s listing will show how long it has been trading and may also show government actions and customer complaints and reviews.
When a business is BBB accredited it can be a good sign. Especially is they have an A+ rating. That’s as good as it gets. A rating of B is not necessarily a bad sign either, but if a business is rated F it’s a fail and the presence of the words “no rating” provides another good reason to avoid.
Asking these questions ahead of time will keep you away from costly surprises once you make some sales.
Although drop shipping partnerships can be lucrative for all parties involved, anyone who is thinking of trying their hand at generating an online income in this way will need to be sure they have the skills and knowledge necessary to drive customers to their sites.
They will also need to be certain they have partnered with a company that is capable of delivering the goods.
Drop shipping is a tried and tested online business model that works but, as with anything in life, success cannot be guaranteed for all and since this business model has a low cost, to no cost of entry, there are – of course – many competitors and multiple stores selling the same products at cut throat margins.