Dropshipping is a kind of order fulfillment in which a product distributor ships items directly to the end user on behalf of the ecommerce website owner or retailer. It is viewed to be an attractive option to many (especially those who are just beginning their business and are strapped for cash) because it helps minimize risk and cost while being easy to use.

Dropshipping Provides a Low Risk Opportunity for Entrepreneurs

• No money is spent upfront on inventory, which means that initial costs are significantly lower when compared to a business that is required to stock up on inventory before a sale can be made.

• Businesses that use dropshipping are less likely to suffer from changes in consumer trends and product seasonality as they do not have to be concerned with liquidating excess inventory.

• Enables ecommerce store owners to offer a wider product range since financing and storage of inventory are not necessary.

Dropshipping Makes For Low Overhead

• Shipping costs can be lower as large drop shippers often have access to special shipping rates that small and new business owners will not.

• Less loses on damaged products and inventory as products sold generally go directly from the drop ship company to the end user.

• Warehouses or other storage space for items is a non issue as you carry no physical inventory. This could translate to huge savings as a business grows.

Dropshipping is Convenient

• Shipping and handling is a non issue.

• New items can be added easily and at anytime without risk.

Dropshipping is a Practical Solution

• Products which are not feasible for many to store (due to bulky size, special storage requirements, shipping logistics, etc’) turn into a viable option for the ecommerce store owner.

Keep in mind that most drop shippers allow the retailer to use their own address and company information on the item’s packaging, so shoppers will in fact not even be aware that you are using the services of a drop shipper. Make sure to take advantage of this feature as having your business information on the package will help the customer in identifying it as well as help your cause in winning their repeat business.

** Also, for related information, take a look at this post on dropshipping clubs and why to avoid them.

We will dropship to your clients, just pay our $129.99 dropship club fee and you can be off and running your business today!

Dropshipping Club? What is that about….Do I get membership card or some sort of vest to wear on Tuesdays?

No, its just a fee we charge to give you the privilege of buying our inventory. Oh, and did we mention each time you make a purchase from us we will charge you a dropshipping fee per box shipped?

Alright, all kidding aside. I personally pay huge amounts of money on PPC campaigns, banner advertising, affiliate program management with the intent to bring sales to my company. Traffic to my website translates to sales and traffic is not cheap. If I can lower my marketing expenses and still make a sale working with an outside sales force, please sign me up!

I never understood the idea of charging someone to sell my inventory. If someone wants to collect money and handle all aspects of customer service while I ship a product out to their client…I say go for it!

I am certain there are some administrative and labor costs associated with making sure a dropship order is disguised as having been shipped from the company purchased through, but besides that I do not see why there must be a membership fee to pay or fee per order?

I know of several large multi-million dollar Ecommerce websites that do not stock a single item; they have several suppliers who ship merchandise for them! They do not use dropshipers that charge a “program fee”, in fact most the suppliers that they use were sought out and not found in some dropship directory.

You can be successful finding suppliers and using the dropship model to ship from virtual warehouses across the country, but it takes great effort on your part to set up a fulfillment arrangement.

Call on prospective wholesalers, distributors and manufacturers and let them know you are interested in selling their product line. Make sure they understand that they have one responsibility, which is shipping. Your company will handle the sale and follow up with customer servicing of the account!

The key to a successful dropship arrangement is spending the time needed to source unique products and selling the concept to your source about the advantage of having an outside sales team sending orders daily!

Let’s travel back a few years, 9 to be exact, and meet a couple of college buddies who were working to earn a masters degree at California State University Chico, here in northern California. Christian (Chris) Friedland and David Bocter started a small E-commerce business selling plumbing supplies, faucets to be exact. This venture met the guidelines for a class project and they both hoped it might bring in a small income to subsidize college expenses.

As a partnership, Chris brought experience from a local plumbing supplier, while Dave provided early funding. Faucetsdirect.com was born and quickly became a success; in fact today the company employs over 200 people here in Northern California under the parent company Improvementdirect.com. The operation now boasts 12 separate websites offering the latest in home improvement products.

Back then and still today; this company uses the Dropship model for product fulfillment. Improvement Direct has fostered relationships with some of the largest manufacturers and distributors of home improvement products in the Country.

In 2007 Improvement Direct was acquired by Wolsey North America, a Fortune 500 Company. Chris still serves as president and is active on the lecture circuit. In 2008 he was a featured speaker at the 2008 Internet Retailer convention and the Wharton School of Business.

Improvement Direct is proof positive that dropshipping can work, but be weary of all of the hype advertised on the Internet. There is no secret dropshipping directory or list that offers exploding profits for your business. If you want to offer an extensive product line your best bet is to seek out product manufactures and master distributors who will serve as your virtual warehouse shipping your items out one at a time to your customer base.

It is all about building relationships with your inventory sources; I would be inclined to say that you should chose a distributor or manufacturer that is not advertising dropship services. Build a relationship and show each prospective inventory source how a mutual relationship can benefit the both of you.

Here are a few other tips if you are planning on using a dropshiper for product fulfillment:

1. Thoroughly investigate the supplier who will be packing and shipping your order. Check financials and search for complaints on the internet.
2. Ask for references from current accounts and then follow up by contacting each to see if they can offer insightful information about their relationship with said supplier.
3. Look for a supplier who will be willing to offer an in-house credit account; typical terms you can expect would be Net 30. Net 30 simply means full payment due within 30 days of purchase.
4. Make a “test” order and have some merchandise shipped to relatives, preferably in two different states.
5. Whenever possible find suppliers who are geographically close to your business location. A face-to-face meeting and inspection of the manufacturers’ facility can pay off In the long run. Plane tickets or a tank of gas can easily be written off as a business expense.
6. Seek out unique products to resell. Why compete with hundreds of other websites selling the same merchandise?

Generating profit through eBay is easy when you have plenty of things to sell. A lot of people think that because they don’t have things lying around the house to sell that they can’t begin selling on eBay, which is not the case. Dropshippers are an easy way to get started, as well as maintain a business on eBay.

A dropshipper is a person or company who sells items one by one at wholesale prices. You list the items on eBay and when make a sell you send the buyer’s shipping information, as well as the payment to the dropshipping company. Dropshipping companies ship the item directly to the customer, listing your name or logo as the sending address. This allows the fact that your items are coming from a third party be safely kept as your little secret.

Since you are buying your items at a low (wholesale) price, you’re able to sell them for a competitive markup to customers but still generate a nice profit.

A reliable dropship company can be considered your warehouse and fulfillment service. You simply advertise the products, collect the money from your customer and send the order to your supplier. Your supplier then ships the item to your customer. How easy is that?

The key to assuring that you will make money from using the dropshipping method is to make sure that you’re using a dropshipping company that is legit.

Never pay a membership fee to any wholesaler to dropship items for you. In addition, the dropshipping company should not require you to pay a “per shipment fee”.

Finding a reliable dropshipper can be a daunting task, but there is a third party company who has performed the necessary research involved in locating reliable wholesale companies who offer a dropshipping service. The company I would like to recommend is Salehoo.

Salehoo is the number one provider offering a very comprehensive dropship supplier directory.

They offer Over 8,000 current, verified product sources to propel your business from the ground up. Whether you chose to sell on eBay or through a website, you will find a dropshipper using the resources found through Salehoo.

In addition to the huge supplier listings, you will gain access to:

• 50,000 registered members in the Salehoo forums who are ready and willing to answer questions about suppliers, dropshipping and general business information
• Expert eBay Powersellers answer your questions
• Newest auction trends and market research tools
• A Full Unconditional 56-day money-back guarantee

Take a Look at what Salehoo offers

Well, listen up…..If you have a few minutes today I encourage you to watch four  jam-packed, content-rich videos in the genre of ‘Selling on Amazon’ and ‘Fulfillment by Amazon.’

I just finished watching them, and let me tell you, there is some powerful information there. HA… I’m even planning to be a seller on Amazon!

The first 2 videos are an introduction to Selling on Amazon:

AN INTRODUCTION TO SELLING ON AMAZON

SELLING ON AMAZON: BEST PRACTICES

The second two videos are more for the seller who is ready to take business beyond dropshipping. They have already worked out what is selling well, and are ready to increase their profits by ordering from their Suppliers in large or light bulk quantities. They still don’t want the hassle of holding inventory and managing staff, but are ready to take their business to the next level. They need a fulfillment center; and Fulfillment by Amazon can be the solution they are looking for.

The next 2 videos will answer:

• HOW fulfillment services works
• WHEN fulfillment services are right for you
• What best practices will help you achieve the maximum
  benefits of fulfillment services

PICK, PACK & SHIP

FULFILLMENT BEST PRACTICES

I watched all four videos and was so completely blown away with all the great information that I wanted to make sure to get this to you as soon as possible!

Here we have a Powerseller on ebay who is dropshipping merchandise from a wholesale liquidator. This seller has listed a wholesale lot of shelf pull cosmetics with the following title:

500 PC New Revlon and Almay Cosmetics – Wholesale Makeup

The ebay seller has listed a “Buy it Now” price of $717.00 with a flat shipping fee $40.00

This seller is listing merchandise found at Via Trading where his cost is .99 per unit or $495.00 for the case of 500 pieces. Gross profit from this auction would then be $717.00 (BIN price) – $625.00 (Sellers Cost) = $222.00

You also need to take into consideration the fees Ebay would charge for this auction:

Ebay Listing Fee $4.00 (Item over $500) + Final Value Fee of $26.41 = $30.41

$222.00 (Gross profit) – $30.41 (Ebay Fees ) = $191.59 to the ebay seller

This seller would have Paypal fees as well so the $191.59 is not the final net profit, but still represents a nice transaction for the ebay seller who does not have to warehouse inventory or pack and ship items out.

This particular ebay seller simply lists merchandise found at Via Trading on ebay making sure enough markup is added. There are hundreds of thousands of ebay sellers dropshipping merchandise from many wholesalers….

Can money be made drop shipping closeouts? Lets think about this for a minute. Lets say you set up a drop ship website selling single products at a retail level…one at a time. For example you sell watches and maybe you get an order today for one watch. You take that order and purchase the watch from your supplier (drop shipper) and they ship it out to your customer. Maybe this watch retailed on your website for $24.99 and your cost is$18.00. You just made a $6.99 profit before credit card transaction fees.

How about wholesaling instead of retailing on your website? You set up a wholesale website selling merchandise by the case. Now your website customer might be purchasing 6 dozen necklaces for his store. Your website wholesale price is $3.99 per necklace and your actual cost from your supplier is $1.39 per necklace!

Simple math will show that this single order comes out to: 72 Watches x $3.99 = $287.28 – 100.08 (Your Cost) = a profit of $187.20 to you!

Becoming a wholesale distributor of closeouts is not very hard as long as you have a few trusted, reliable sources for merchandise that will drop ship for you without charging you a fee.

The two main benefits of drop shipping are – no upfront inventory to purchase and a positive cash flow cycle. A positive cash flow cycle occurs because the seller is paid when the purchase is made. The seller usually pays the wholesaler using a credit card or credit terms. Therefore, there is a period of time in which the seller has the customer’s money, but has not yet paid the wholesaler.

Many sellers on online auction sites, such as Ebay, also drop ship. Often, a seller will list an item as new and ship the item directly from the wholesaler to the highest bidder. The seller profits from the difference between the winning bid and the wholesale price, minus any selling and merchant fees from the auction site. A seller is permitted to list items that are currently not in his/her own possession, provided that he/she follows eBay’s policy on pre-sale items.

There are several fantastic closeout companies here in th US that will be happy to drop ship to your customers. Here is a list of a few that we have used and recommend:

MBK Wholesale

H & J Closeouts

Countryside Closeouts

Sav-on Closeouts

SP Clothing Closeouts

Lets look at one company who has been very succesful at brokering merchandise, www.DollarDays.Com . Dollardays catalogs thousands of products in several categories and sells to small business owners on a wholesale level. Much of the inventory Dollardays sells is direct from some of this country’s largest liquidators and wholesalers. Typically based upon volume you might notice that Dollardays will be selling (brokering) the same product as the “XYZ Company” at the same price. If it is known that Dollardays is selling “XYZ’s” merchandise, how then can they sell it as the same price XYZ is? Simple, Dollardays has an agreement with XYZ that states they will be able to buy lower than advertised price points

The XYZ Company then fulfills orders for Dollardays shipping out with a Dollardays invoice. This practice is done all over the internet everyday