A dropshipping business is still a relatively new type of business, but the possibility of high profit exists. It costs little and takes very little time to operate. This makes it the perfect supplemental income for a work-at-home mother who may not have a lot of time. Here are a few things to keep in mind if you want to start a dropshipping business.
What is a Dropshipping Business?
Dropshipping is a simple concept. You gather orders for products from a wholesale business that will then ship those products for you. You collect the money from the customer and pay wholesale to the wholesaler. It's that simple. You set the retail price, find the buyers, and contact the company once the order is placed. They ship it for you. You can even provide the company with your own shipping labels so that the product appears to be coming directly from you.
Training and Education
Some good business sense is helpful, but you need virtually little training and education to begin a dropshipping business. Taking a few business classes at your local college wouldn't hurt, however.
What You Need to Begin
Like any business venture, research your business thoroughly. First, make sure that the product you want to sell is one that customers will buy. Secondly, research any company that you will be working with. With the potential for high returns, there are a lot of scams involving dropshipping businesses! Here are some tips about what to look for in your wholesale business:
- Avoid resellers. Some companies offering work for dropshipping businesses are actually resellers. These companies actually look for dropshipping companies like yours to place orders, but do not have an inventory of their own. They are dropshipping businesses who are buying your order from a wholesaler or manufacturing and marking up the price to you. Working with these companies can make it hard for you to make a profit. Always work with wholesalers or manufactures whenever possible.
- Be wary of setup fees. If the wholesale business charges you a setup fee, make sure that you are receiving a valuable service for your money. Many businesses that charge setup fees are resellers.
- Take note of shipping and handling fees. Many wholesale businesses charge high S&H fees that may turn off a customer to your business. Always look for dropshipping businesses that offer low S&H costs.
Other things you will need for your dropshipping business:
- Make sure you are a legal business. Get a taxpayer ID, business license and DBA.
- Set up an Internet store. You will need: Web site, shopping cart software and a merchant account. Many dropshipping merchants use eBay as their store.
So how much can you make in a dropshipping business? Well, it depends on several factors, such as how hard you work and how much you markup your sales. You can typically expect to earn a profit of 20 to 50% of the cost of the item sold. Don't worry about the cost of shipping and handling, because you can pass those costs on to your customer. The biggest factor of how much money you'll make, however, is your ability to find customers.
How to Market Your Dropshipping Business
There are two ways of marketing your business, online and offline. Here are some online methods of marketing your business:
- Keywords. Keywords are important for customers to find your web site using a search engine. Make sure to include keywords that customers are likely to search for when looking for a site like yours. Use them whenever possible, but do not stuff your keywords.
- Web traffic. A way to increase web traffic is to swap links with other sites. Think about all the resources that will benefit your customers and provide links to those sites. Once you have done so, contact the companies whose sites you linked to, and let them know you have done so. Provide them with a description of your site and your URL in case they would like to provide a link to your site as well.
As an Internet business, offline marketing is often overlooked. However, here are some good methods to market your dropshipping business:
- Paper promotion. Make sure that your URL is posted on every piece of paper you use for your business, such as business cards, letterheads, invoices, receipts, fax sheets, labels and order forms.
- Freebie items. If you give away any items to your customer, make sure your URL is plastered on it. Items such as t-shirts, caps, coffee mugs, umbrella, pens, paper weights, key chains, calendars and stickers all work.
- Post card marketing. You can mail discount coupons with your URL on postcards to your customers.
- Flyers. This classic marketing strategy can be useful to get your URL out there.
- Word of mouth. Ask your friends and family to check out your website. Ask all customers to also tell their friends and family about your services.
Whether you're looking to make your fortune on the Internet or just a supplemental income, a dropshipping business could be for you. With minimal capital, a few hours a day and a good startup, you can soon find yourself the owner of your own successful business.