Are you already planning to venture into an online drop shipping business but need some important information? You’ll learn every bit you need to know about drop shopping in this post.
When getting started with an online business, one of the key components is having services or products to sell. Therefore, how would you acquire services or products, where do you intend to get them, how would you ascertain if they are going to sell or not, and how do you hope to present them before your prospective audience?
In the massive world of online entrepreneurship, a lot of answers are provided to those questions. You could come up with your own services or products – but it may take some time to get it viral.
Or you could alternatively purchase products from a manufacturing company and have these items shipped out to your clients as they order. Literally, this is a costly process, and it involves the risk of having to invest your resources in keeping inventory, purchasing stock, and not making sales, which can be specifically worrisome if the items you’re dealing in involves perishable goods.
However, there’s a business solution that helps you step aside all those trials and hassles. And this makes the overall startup exercise for your online entrepreneurship that much more flexible. This is known as drop shipping. A drop shipping venture is one of the easiest, fastest, and most lost-risk means of starting out an online business.
Here’s an overview of how you can get started with a drop shipping business, how the model works, and the crucial things to know prior to venturing into it.
To make the right decision as to whether you should venture into an online drop shipping business or not, take a good look into the pros and cons of getting started.
Pros of Drop Shipping
- Leverage a solid, proven business representation as leveraged by big-time retailing brands like eBay and Amazon
- Sell all kinds of products, in almost all specialties
- Shipping or packing out products isn’t required
- Storing inventory isn’t required
- Up-front capital isn’t required
Cons of Drop Shipping
- Not all brands are ready to venture into drop shipping
- High cost of drop shipping or handling that makes breaking even almost impossible
- Specific drop-ship dealers do have retarded ship times, inconsistent services, or complicated return policies
- You must get accurate in-stock details from drop shippers in order not to sell out-of-stock items
Getting Started with a Drop Shipping Business
Though estimates differ, up to 30% of online retailing brands leverage drop shipping. Thus, this business is a solid, proven model, and you can rest assured that you’re into a great company.
As a drop shipper, any product in any specialty can be sold. Owing to the fact that just any item can be purchased on Amazon, so far it’s being sold on Amazon, you can also sell it in your drop shipping venture.
The advantage of being a drop shipper for another person’s products makes it feasible that you may not deal in the traditional business hassles like:
- Preparing orders, packaging and shipping products and consolidating them a given number of times daily and moving down to the post office to get them ready for shipping
- It can be so costly to store products, rent warehouses, and purchase vast amounts of inventory
- Having to purchase wholesale items to resell with your own money put down upfront, without being sure of getting sales for them
When you run a drop shipping business, all those potential losses and issues of having to put down upfront capital spending will be avoided.
Aside from the benefits stated above, you still do not have to bother hiring people and incurring heavy expenses on salary, having to be present at a physical location while in standard business hours, leasing or building a warehouse space.
Having had an overview of drop shipping and its advantages, below is how the drop shipping business model works.
How a Drop Shipping Business Works
Being a drop shipper, you operate along with a distributor or wholesaler that is offering the drop shipping service. Not every wholesaler or manufacturing company is offering this service, but many companies do.
You’d have to handle the marketing area for your own business, meaning that you organize a digital storefront on stores like Amazon, set up your personal site with a shopping cart, socialize, do a lot of blogging, build email lists, and whichever way you believe you can reach out to your prospective audiences.
You’d have to introduce the products to them, exploring your expertise to make them see how the products can help improve their lives. Typically, you embark on all of the promotion, advertising, and marketing to drive more customers and generate sales.
The drop shipper takes over the process when the time comes to send the products out and complete it. The inventory is right in the drop-ship company’s warehouse. You forward orders to your dropshipper, making a wholesale payment for each of the orders.
You can do this via email, sent via a spreadsheet file or forwarded online – options depending on the dropshipping company. In most cases, the whole exercise can be completely automated saving you a lot of time and leaving you off the scenario so you can focus on what matters – which is promoting other than operating your business.
The dropshipper consolidates the submitted orders and ship them straight to your client without stating any information or pricing details about you or the supplier, as a result of which clients believe that those products are directly sent from you.
A certain fee is charged by the drop-ship firm in respect of the service. Each firm differs, but commonly, it ranges between $2 – $5 per order or item and this is frequently called a drop-ship fee or handling fee – this is even on top of the wholesale price for both the shipping cost and the item itself, which adds up.
In spite of the smaller margins, you can, of course, earn some profit as a drop shipper. You can enhance your profit by raising your prices a bit – with as little as your market can afford. More volume can also be sold. And, above all, you can as well negotiate with your drop shipper from time to time on reducing a handling or drop-ship fee.
An alternative tactic you can implement is that you can do what is known as private labeling or white labeling the items to be sold, which means putting your own brand or name on them so you can easily differentiate yourself from all the rivals selling similar items.
What Products Can You Drop Ship?
If you are passionate about a specific product or market, that eagerness will trigger your marketing endeavors and strengthen your business by extension. Not that alone, you’ll delight in what you’re dealing in which will automatically make your job more productive and exciting.
Good to know, there are several drop shipping firms that deal in just any specialty, type of product, and every market. This includes yoga clothes, baby products, books, arts, clothing, beauty supplies, electronics, home and garden, supplements and many more.
A perfect place to figure out hot or trendy niches is big-time retail platforms like eBay, Amazon and the likes. Whichever products you find on the bestseller lists, a good fit could be found for a drop shipping venture.
However, while searching, do not forget to have a close watch on trends you come across on social media, especially Facebook! Also, hear your family and friends out on the products they use or talk about, and sort for items that are frequently mentioned in broadcasts.
During the basketball season, holiday season, back-to-college and other remarkable times of the year, related items can feature well.
Always bear in mind that while you may choose to deal in seasonal or trendy items, you can as well ensure you sell items that are highly demanded for and yield numerous sales.
Choosing a Drop Shipping Company
Prior to working with a drop shipping company, you should first from a customer’s viewpoint pass through the order procedure yourself. It’s vital to have an idea how easy and fast it is to order items and get them fulfilled, how the drop shipping company handles any dispute, challenges or returns.
Find out from prospective drop shippers how they’re going to send notifications to you of the level of their in-stock for each item. If it happens that you sell a product while the drop shipping company has gone out of stock, it can potentially lead to a huge predicament for you and constitute annoyed customers.
This will enable to assess the product quality. Ensure the items are at their high quality level you’d boast of offering to your customers. In most cases, drop shipping companies will be ready to forward to you an appreciative item for assessment or sell it to you at least at their own cost.
If your niche is related to some other items you’ve used, you can try testing out the item yourself. Study the item, use it and figure out if it is as described. Search for reviews online to find out if your own experience is in line with that of others.
If your niche isn’t related, look for a family member or friend to help test the product out. Also, conduct your research properly by reading reviews online, and niche-related forums to see if there are comments from other users, and similar Facebook groups. Knowing the item one way or the other will, of course, give you confidence to sell it, making your promotion endeavors much more effective and accurate.
Here are some top shipping directories that are functional today:
- Worldwide Brands
- Sunshine Wholesale
- Dropship Direct
To find more drop shipping companies, you can simply conduct a Google search.
Typical Questions to Ask a Prospective Drop Shipping Fellow
Following up with a drop shipping company is a prominent way to get started with an online business with only little risk. Of course, you aren’t going to risk a heavy bulk of funds by not having to put down some upfront startup capital. You would neither need to keep any inventory nor stick to shipping items out to customers on time.
However, this does not mean you would have to delegate those crucial components of your own business to anyone just anyhow. Partnering with a substandard drop shipping company could end your business in jeopardy.
Here are some important questions you would need to ask to know if they are a good fit for your online business:
- What channels of shipping items are accessible? This is particularly vital if their location is overseas and shipping to international customers. Do they leverage services like FedEx, UPS, and the likes? Do they depend on the United States Postal Service all alone?
- Once an order has been placed by a customer, for how long does it take to get completely packed and shipped out of their warehouse?
- Does the company have an accurate tracking system in order to help you or the client follow the status of the shipped order? This is certainly one of the few things clients would love to find in a drop shipper.
- Do offered items come with warranty certificates? What comes up in the event that the client is not satisfied with the shipped item – what is the policy for returns? Is the item guaranteed by the drop shipper?
- If some shipments get lost, how are such issues treated or handled? You wouldn’t want to frustrate customers over complicated issues you cannot handle. Always realize that you’re completely responsible for client service as a seller. Do lost shipments hold you responsible for some spending?
It’s a great idea to search through blogs, forums, and social networks for comments regarding the drop shipper from other internet entrepreneurs.
Are you ready to give it a go with a drop shipping business? Remember that with a personal website, you can make the most out of any online business and there’s a platform that is more than ready to help you accomplish your online goals with all of the support, tools, and resources you’d ever need to build a virtual real estate. .