Drop shipping is a sales method where a consumer makes
orders online and these orders are forwarded to a vendor. This vendor ships the
orders from a warehouse to the customer directly. A drop shipping store owner
gains the difference between end-user prices and vendor prices. More and more
entrepreneurs are getting involved into drop shipping business.
When starting an online business, one of the key elements is
having products to sell. In fact, without products... you don't have a business
at all. That's pretty obvious, right?
So how do you get products...where do you find them... how
do you know if they'll sell... how do you get them to customers?
Starting a
Drop Shipping Business
Estimates vary. But industry watchers have found that
between 20 percent to 30 percent of online retailers use drop shipping. So it's
a proven business model, and you'll be in good company if you go this route.
Even big retailers like Amazon use drop shipping. With drop shipping, you can
sell just about any product in any niche. And the best part is you don't have
to deal with the hassles of traditional businesses, such as:
Storing your products (it can be very expensive to buy
massive amounts of inventory, rent warehouse space and who want to fill a spare
bedroom or garage with boxes)
Packaging or shipping any products (can you imagine the
hassle of taking orders and boxing them up multiple times a day... and heading
to the post office?) This is definitely not a scalable way to do business.
Most importantly... you don't have to put down your money
upfront to buy products wholesale to resell... that you aren't sure will sell.
You see, when you run a business through drop shipping, you
avoid all of those risks and potential loss of capital investment.
Now that we've taken a look at the benefits of a drop
shipping business let's take a look at how the business model of drop shipping
actually works.
How Drop
Shipping Works
With drop shipping, you work with a wholesaler or
distributor that offers this service. Not all manufacturers and wholesalers offer
drop shipping, but many do.
You handle all the marketing for your business... you set up
your website with a shopping cart (or set up a virtual storefront on Amazon)...
write your blog... do social media and email marketing... you contact the
prospects and customers. You tell them all about the products and how it will
make their lives better. Basically, you do all of the marketing, advertising,
and promotion to get the customers and make the sale.
But when it comes time to actually send out the product and
fulfill it... the drop shipper takes over. They have the inventory in their
warehouse. You send them the orders that come in, paying the wholesale price
for each order. This can be done by email, submitted online, or through a
spreadsheet file - it depends on the drop shipper. They put the order together
and ship it to your customer
But you can still stay profitable as a drop shipping
business, despite the thinner margins. If you want to increase your profits you
raise your prices - at least as much as your market will bear. You can also
sell more volume. And you can always contact your drop shipper to negotiate a
lower handling fee.
Remember though, that you aren't risking your money upfront.
You are only paying these fees if you actually sell a product.
What
Products Can Be Drop Shipped
As with any online business, you want to be in a market that
is "hot" and where there is a large number of people ready to buy the
products you sell. In the best-case scenario, the niche you specialize in
should also match one of your personal interests.
If you have a passion for a certain market or type of
product, that enthusiasm will make your marketing efforts and by extension your
business... will be stronger. Not only that, but you'll actually enjoy what
you're doing - making your work seem more like play. What's better than getting
paid to do what you love?
Fortunately, there are drop shipping companies that work
with just about every market, niche, and type of product. Baby items, women
apparels, electronics, home household items.
A great place to check for hot niches is big online
e-commerce platforms like Amazon. Whatever items are on the bestseller lists
there could be a great fit for a drop shipping business. But also keep an eye
on trends you see on Facebook and other social networks.
A big mistake a lot of people make when starting any type of
business, drop shipping included, is that if they see other people doing it
they think it's too competitive and they can't make any money in it. Nothing
could be further from the truth.If you see a lot of competition that's the sure
sign of a big, healthy, profitable market.
Picking a Drop
Shipper
Before you ever start working with a drop shipper, you
should go through the order process yourself from a customer's point of view.
You want to see how easy it is to order the product, how long it takes to ship,
how the drop shipper deals with any problems.
Of course, this will also give you the chance to also see
the quality of the product. You want to make sure this is something you'll be
proud to offer your customers. In some cases, drop shippers will be willing to
send you a complimentary product for evaluation or at least sell it to you at
their cost.
If you are into a niche and have used other products that
are similar, you can test the product yourself. Use it. Study it. Does it do
what is promised? Is it made of quality material or ingredients? Check the
reviews of others online to see if your experience matches up. If you're not
into the niche, have a friend or family member try the product. And also be
sure to thoroughly check online reviews, forums in that niche to see any
comments from users, Facebook too. Do your research, in other words.
Knowing the product will also help you sell it. Your
marketing will be that much more authentic and effective.
Drop Shipping Really
Is One of the Easiest Ways to Do Business Online
A drop shipping online business is a quick, easy, and
low-risk way to start selling online. You won't have to put up a bunch of money
upfront on inventory that might not sell. And your drop shipping partner will
handle delivery. Pick the right niche market and product, and you could have a
profitable venture on your hands. You could even expand into other niches and
sell other products, too. There are many people making healthy six and
seven-figures strictly from a drop shipping business... the possibilities really
are endless with a drop shipping business.
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