What is Drop Shipping?
The Drop Basics
In a nutshell, drop shipping involves an agreement between a retailer and a manufacturer in which the manufacturer undertakes to produce and ship items sold by the retailer to the retailer’s customers. The customer pays only the retailer and the retailer pays the manufacturer a certain fee for production, storage and shipping costs.
Drop shipping is most frequently used by small Internet businesses who want to concentrate on online marketing and sales without having to worry about additional overheads that would result from the manufacturing and shipping of goods of the goods they sell.
The advantages of drop shipping
The most obvious advantage to drop shipping is that as the retailer, you do not need to worry about manufacturing your own goods or creating and keeping a complete inventory of products sold in your online shop. You can offer new products and remove old ones from your online store in a matter of seconds without having to worry about ordering or being left with any of the stock you are selling.
In fact, physically it is likely you will never even set eyes on the stock you advertise in your store, let alone have to deal with problems such as broken items or returns. Everything to do with the production and shipping of items will be taken care of by the manufacturer you select, from storage to shipping costs to customs duties and delivery hassles.
How to become involved in a drop shipping business
This is a simple and cost effective way to become involved in e-commerce. The first step is to decide precisely what type of products you would like to sell and identify manufacturers who specialize in producing the products you are looking for. As a general rule, less well known products are a good place to start as market competition will not be as fierce when it comes to these products.
When choosing a company that you are going to deal with, make sure you take into account things such as billing options, shipping policy and most importantly the wholesale price of manufactured goods. Make sure you are clear on precisely which services they offer and what will be included in the amount that they bill you for. Avoid any manufacturers that have a minimum purchase policy as this will prevent you from placing single orders on behalf of your customers. Also beware of companies that want to charge you a set monthly fee or are unwilling to give you a good wholesale price for goods because chances are good that dealing with them will ultimately just be a waste of time and energy.
Once you have selected a drop shipping manufacturer, you will need to open an account with them. Typically, they will then provide you with a list of images and descriptions of all the products that they manufacture which you can then put on your website and sell to your customers – hopefully hassle free and at a good profit.