Drop shipping – An Entrepreneur’s Dream or a Fool’s Nightmare?

For many people, the possibility of selling goods online appears fraught with difficulties. Firstly, you need to locate a product, store inventory, organise a good shipment or carrier company and so forth. But what if you could become a successful online retailer without having to worry about those problems?

The answer is that you can…a simple type of retail called drop shipping. Let us take a look at the pros and cons of this method of retailing.

Drop shipping is the name given to the retail method where you sell a product at a price of your choice but do not keep the products in stock. You collect the payment from the buyer and pass the order onto the supplier who despatches the goods on your behalf. You pay the wholesale price to the supplier and the difference between that and what you have been paid by the buyer is your profit.

With this method of retailing, you are able to send low quantity orders gathered through your website to wholesalers without the worry of packaging and despatch. You manage the promotion of the product and collect payment and the drop shipper looks after the rest.

However, there are some rules you need to be aware of in order for drop shipping to be a profitable venture for you.

Firstly, you need to find a product that people want to buy and that you can make enough profit on to make it worthwhile. Do some market research to try to gauge the demand of any particular item. Look at how much competition there is and what they are charging. Remember, you want to be competitive but you still want to make a profit.

Don’t try to sell too many related products at once. Be choosy about what you are going to sell and concentrate your efforts on particular types of items.

Now of course, you need a reputable drop shipper, not some middleman posing as one. Once again, you need to do some research. Find out how long the company has been operating. You also need to know what costs are involved in order to calculate your profit margins. Also, there are some who will want to charge you a regular fee to use their service. These are to be avoided.

It is not too difficult to find a drop shipper. Contacting wholesalers directly to see if they operate a drop shipping service is a good way of finding suppliers. Also finding them through the internet is another way but be careful. The easiest and probably the safest way to find drop shippers is through a drop shipping directory like the Drop ship Source Directory which you can search for on the internet.

Also, find out about their shipping policies. Some companies will only ship to particular destinations. You also need to determine that they are using a reputable firm for delivery.

An important factor to take into consideration is their refund policy. Do they have one and what does it entail? Do their products come with a guarantee? Make certain you get all of this information in writing before choosing to deal with the company.

So, let’s summarise this practice of drop shipping so that you may make an informed decision regarding your online business:

You sell the item online at a price determined by you
You collect payment from the buyer
You place the order with the drop shipping wholesaler
You pay the drop shipper using a credit card or other pre-approved means
The drop shipper despatches the order to your customer

Drop shipping can be a fantastic way for the entrepreneur to get into the retail market. However, if you fail to research all of the above factors, you could be just another failed marketer on the roadside of the information superhighway.

Good luck!!!