Drop Shipping Business

Dropshipping-businessAdopted by giants like Amazon.com and Overstock.com, drop shipping is a business model that has completely changed the way markets operate today.  No longer do you, as the seller, need to invest thousands in inventory, warehousing, and shipping costs.

A dropshipper will ship consignments as small as a single product directly to the customer’s door.  This leaves you free to focus on core business generating activities and increasing profits while being able to provide innovations and greater product variety to the customer.

Using the Internet to sell products and services to ever increasing number of net users is a good way to start your own business.

How To Get Started With A Drop Shipping Business

First of all you will need to get a business license and a tax ID number so your business is legitimate and legal.

Next you will need to decide which products to sell.  You need to consider the popularity of the product and the level of competition.  Popular products might seem like the ideal products to market but if there is too much competition, you may have a hard time breaking into the market and achieving success.

Niche products that don’t have as great a demand and less competition are often a better alternative.  These small markets will be easier to rank high for and less competition will result in more sales.

The next step is to find a reputable drop shipper.  Take a look at my own recommendations here at Work From Home Watchdog. Ask other online sellers for recommendations.  Refer to eBay’s partner list for trusted drop shipping companies. 

If you use eBay’s channels when choosing a drop shipper, you will have some recourse and assistance if you encounter a problem.  Several of eBay’s recommended drop shippers offer a free trial so you can preview their system and products before making a commitment to do business.

Once you have found a suitable drop shipping company to work with, you may need to sign contracts or agreements to do business.  Read all paperwork or documents thoroughly before signing anything. 

Make sure you understand all of the provisions of the contract.  Some drop shippers require an initial registration fee.  Others require a monthly fee to access the product catalog.  Gain a thorough understanding of how the process works.

You will also need to ask about shipping times, payments, and returns.  Remember that the drop shipper will be dealing with your customer and delivering the product on your behalf. 

You want to make sure that the company can deliver the products quickly and professionally because your reputation will suffer if the orders are not shipped quickly and efficiently.

Choose reliable wholesale drop shippers and surefire products that will sell in volume and have wide market appeal.  Market your products on your own website and/or on Internet auction sites such as eBay.

Next you need to consider payment options and tracking.  Your customers might want the option to pay with a business check, money order, Paypal, debit or credit card. 

The more options a customer has to make a payment, the more likely they are to pay for an item to be shipped and delivered.  Once an item has been shipped, you should be able to track the item and ensure the delivery service is reliable and consistent.

You’ll want to learn how to drive web traffic to your store to increase your sales and how to build relationships with past customers.  It is five times more expensive to sell your product to a new customer than it is to sell to someone who bought from you in the past.

Disadvantages Of A Drop shipping Business

Drop shipping has some inherent drawbacks too. 

The biggest is you have to totally rely on the drop shipper to fulfill your order and get the product to your customer on time. 

Also, you don’t have any control over price or availability of the product.  However, a good drop shipper cares about their reputation since their business depends on retailers like you.  That is why you have to be very careful in choosing the right drop shipper.

It is important to remember that drop shipping isn’t a magic formula that will make you rich.  Building a business always take a certain amount of elbow grease. 

The real “magic” is that drop shipping allows you to invest your money in marketing rather than inventory and a well planned marketing strategy is what will ultimately help you build a lucrative online drop shipping business.