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.
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