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Hugalicious Ragdolls
03-31-2011, 11:39 PM
Drop shipping is when the product distributor takes care of all the shipping for you. Rather than ordering stock in bulk, the stock remains with the distributor then when you make a sale, they pack up the item and send it straight to your customer with your company label on the box.

Drop shipping is great for those who are new to online selling as it means there is little to no start-up cost and virtually no risk involved, as you won't need to invest in a bulk lot of items that you aren't 100% sure will sell. Using drop shipping services also eliminates the issue faced by many online sellers: where they will store their items - there is no need to hire any storage which means big savings for you!

However, drop shipping does have some drawbacks. Firstly, drop shipping is slightly more expensive than buying in bulk. Often a drop shipper will add US$2-US$5 dollars onto the cost of the item to cover their costs of processing the item. This means that keeping up with the staying competitive in high profile categories like electronics and clothing may be difficult but it certainly does not mean that you cannot make money when you drop ship, it simply means that finding a niche market will be even more important.
The 5 step guide to drop shipping:

Step 1: Find a drop shipper

You can do this by either Googling your product name + "drop shipper" or you can check out online wholesale directories.

Step 2: Set up an account with your drop shipper

You may have to pay a small account set up fee - while this isn't always ideal, it is common practice for drop shippers. You should be weary, however, of suppliers who insist on you paying monthly or annual fees.

Different drop shippers have different types of accounts which you can set up. You can either credit your account and use the credit to pay for items you purchase for your buyers or you can pay as you go and use the money you receive from buyers to purchase the items

Step 3: List the items you wish to sell on your website, estore or online auction site such as eBay. You can list as many as you like, seeing as you don't have to pay for them until they sell! Use the photos and item descriptions that your drop shipper supplies.

Step 4. When the item has sold and you have received payment from your buyer, log on to your suppliers web site and purchase the item you have sold and have it sent out to your buyers address. If your drop shipper does not have an ecommerce site set-up which you can buy directly from, simply send them an email with the details of what you want and where to send it to.

Step 5. It's all up to the drop shipper now! They will package and ship the item out to your awaiting buyer.


MarMacGillivray
04-01-2011, 12:50 AM
That's a great guide to dropshipping :)

We occasionally get products shipped for our store; over the years, we have built up good relationships with companies who will send out goods for us if we don't have them in house.

There is one "trap" which catches me out from time to time - and that is, if I have listed products in several places online, I can forget to check the prices and make sure that I keep them up to date. So, orders can come through which are at old prices - and which naturally keep profit margins much slimmer. There is no second-chance saloon once someone has bought the product.

The other thing you have to watch out for is when a company changes their product ranges or discontinues a line. I know you can (and certainly should) cancel the order if you sell something which is discontinued - but it can hurt your ratings if you do this often.

I still believe there is great merit in attending trade shows and getting to know the companies. That also lets them understand you - and it will put you on their mailing list for new additions to ranges and new prices. It might also let you select goods to market which don't have a good online presence.

Mar

Hugalicious Ragdolls
04-01-2011, 01:05 AM
That's a great guide to dropshipping :)

We occasionally get products shipped for our store; over the years, we have built up good relationships with companies who will send out goods for us if we don't have them in house.

There is one "trap" which catches me out from time to time - and that is, if I have listed products in several places online, I can forget to check the prices and make sure that I keep them up to date. So, orders can come through which are at old prices - and which naturally keep profit margins much slimmer. There is no second-chance saloon once someone has bought the product.

The other thing you have to watch out for is when a company changes their product ranges or discontinues a line. I know you can (and certainly should) cancel the order if you sell something which is discontinued - but it can hurt your ratings if you do this often.

I still believe there is great merit in attending trade shows and getting to know the companies. That also lets them understand you - and it will put you on their mailing list for new additions to ranges and new prices. It might also let you select goods to market which don't have a good online presence.

Mar

Hi Mar,

thanks for your input!

I agree about keeping up to date with your supplier's inventory, so far, I haven't been caught out yet (touch wood), but I only deal with a couple of suppliers who drop ship for me. I also buy wholesale in bulk from one of those suppliers, which is great, as I have a certain amount of stock on hand, and when I run out and am waiting for my new shipment to arrive, I will have items dropshipped in the interim.
My profit margin is slightly less doing it this way, but my customers aren't having to wait so long for delivery.
Dropshipping is also a good way to 'test the market' before taking the plunge and potentially getting stuck with a thousand widgets that nobody is interested in buying :)

cheers
Angela


Jason L
05-19-2011, 02:32 AM
Dropshipping sometimes works the following way:

1) you sell the product on Ebay and get paid by your customers
2) you provide your customers shipping addresses to drop-shipping centre and they arrange the deliveries without any prepayment.
3) once your customers get products you send money to drop-shipping company



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