Archive for the ‘Drop Shipping Articles’ Category

In this article you will find some of the most frequently asked questions answers about drop shipping. Check them out to get a brief description on drop shipping.

Q – What is the meaning of the word Drop Shipping?

A – Drop shipping essentially means that you conduct a trading business without maintaining any stock. You only forward the order placed by your online customer to your drop shipper who in fact, stocks that item and also ships it to your customer.

Q – What do I need to start this business?

A – A computer with an Internet connection, one or more drop ship wholesaler and a way to advertise the drop shipping stock under your company name like eBay or your own Website. Also get the necessary permits and license to run your business from the concerned authorities.

Q – How and when do I start making money?

A – You will have to add your profit margin to the rate of the product, which your drop shipper has quoted, before you advertise that product on the Internet.

Once you have accepted your customer order and collected the payment, you will have to forward that order and also make your payment to your drop shipper. The difference in your drop shipping rate and the rate at which you have sold the product is your profit margin. You start making money from your first order itself.

Q- How do I know what rate to quote for the product?

A- You can check out similar products being offered on the Internet. Then compare that rate with the rate offered by your drop shipper. You can then quote a rate based on this information.

Q- What do I do once I get an online order from my customer?

A- You accept the order and collect the payment from your customer via credit card or PayPal and then forward that order to your drop shipper, who in turn will arrange to ship that product to the address provided by the customer.

Q- How do I get hold of a drop shipper?

A- You can find them over the Internet or through sites related to eBay. You might have to become a member and pay a membership fee to get access to that list.

Once you get a list, then you can check out the drop shipping products line-up online. Choose a drop shipper who can also be contacted over the phone 24/7. Check out his reputation by contacting the manufacturer directly.

Q- What are the plus points in drop shipping?

A- You do not have to maintain any inventory. You also do not have to worry about dispatching your goods. The initial investment, overheads and the overall risk factor are very less.

Q- What are the minus points in drop shipping?

A- Your margins are limited since you have to quote on the rate that your drop shipper quotes to you. Your reputation could be damaged in case your drop shipper does not deliver on time or delivers products of bad or doubtful quality.

So, check out these facts before you decide to drop anchor at the drop shipping port.

Paul Marshall your online guide helping you to make money online for more on dropshipping visit http://www.your-freeinfo.com

Drop shipping is ‘a type of retailing where the retailer does not keep goods in stock, but instead passes the customer’s order and shipment details to the wholesaler, who then dispatches the goods to the customer directly.’ [Source: Wikipedia] The retailer then keeps the difference between the wholesale price and the retail price. If you’re planning to start an online retail business, drop shipping may be just the option for you.

Let’s review the process of drop shipping, and analyze the advantages that the drop shipping business model has over the others.

No Upfront Payment

First of all, you do not need to pay upfront for a stock of products before you can start selling. With drop shipping, you can simply get into business by displaying the products you want to sell on your website, before you’ve actually purchased any of the goods. After you’ve received your order via the internet, you can then forward the order to the drop shipper, usually through email, who will then deliver the products to your customer(s).

In essence, this is the reverse process of normal retailers. You actually ‘sell high’ first before ‘buying low’. Since you’re not making a huge upfront down-payment for your products, you’re not bearing any risk at all. There isn’t a risk of purchasing thousands of units of a product, and realizing that you’re not able to sell them because the consumer demand is insufficient.

Thus, by not needing to make an upfront payment to stock products, you’re benefiting in two ways. One, the drop shipper bears all the risk for you. If the products are not in-demand, it’s the drop shipper who is potentially making a loss, not you. Second, your startup costs are extremely low. All you need to invest in your drop shipping business is an initial deposit or down-payment, to demonstrate your commitment to the drop shipper, and also ongoing web hosting fees and advertising fees. This is a huge difference from retailers who have to invest on a fortune to purchase huge stocks of goods to get into business.

Product Delivery Taken Care Of

The second feature of drop shippers is that they take care of the products delivery and shipment for you. This is highly advantageous if you’re just starting out in business because you can focus all your time and efforts on marketing your business, instead of worrying about order fulfillment or delivery.

Order fulfillment can be a very tedious and time-consuming process if your monthly orders number in the hundreds or thousands. You need to spend tremendous amounts of time keeping track of your inventory, packaging the products and shipping them to your customers individually. On the other hand, if a drop shipper takes care of product fulfillment for you, you’re automating the process of shipping the products, and you can focus on your core competency – marketing your business to bring in more customers. This is another great advantage of using drop shipping as your business model.

No Need For Warehousing

Since you do not need to purchase a huge inventory of stocks from the drop shipper, there’s no need for warehousing costs as well.

This is highly advantageous if you consider this opposite scenario: If you rely on the usual wholesaling business model instead of drop shipping, you need a location to store your products after purchasing your initial stock. Depending on the space you need, your monthly warehouse rental costs can cut into your profit margin significantly. You may even be operating your business at a loss. Why not let the drop shipper stock the products at their warehouse until your customer makes a purchase instead?

Flexibility Of Product Catalogue

With drop shipping, you have the choice of promoting any number of products you want on your website catalogue. Since you do not need to make upfront capital investments, you have the flexibility of promoting as many products as you want, as long as the products are all related to the category of products you sell.

However, it’s essential to strike a balance between the range of products you have, and the ‘product focus’ of your business. Your business should focus on a single category of products – you cannot be a supplier of everything to everyone, like Wal-Mart. Be sure to include only the products you think are related to your core ‘product focus’, and avoid promoting too many unrelated products on your web catalogue.

No Minimum Quantity Restriction

The last advantage of drop shipping is that most drop shippers do not impose a minimum quantity order. When your customers place orders at your website, you can forward your orders to your drop shipper one-by-one. Most drop shippers do not have a problem with that. Thus, drop shipping is very beneficial for your business because it offers the greatest flexibility.

In conclusion, drop shipping is definitely an option you want to consider if you’re planning to start an online retail business without all the hassles of inventory and product delivery. If you evaluate the above advantages carefully, you’ll realize that drop shipping is undoubtedly a viable option for the small-business retailer. Large retailers, on the other hand, will have enough resources like capital to use the wholesaling model for their business.

Ray Yee is the founder of Dropshipperscentral, a website that provides a wealth of informative articles, guides and resources on everything you’ll need to know about setting up a Drop Ship Business and marketing it. Click here for the Drop Ship Directory from http://www.dropshipperscentral.com.

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