What is Drop Shipping? Well, this form of online retailing is when you list an item, on eBay or Amazon for example, without having the product in inventory. You generally work with a wholesaler, advertise their product at retail price, and when a customer purchases the aforementioned item, you order the product. Usually and profitably you purchase the item from a wholesaler at a discounted price. At this point the wholesaler, usually for free, ships the neatly packaged, new and impeccable, item directly to your buyer. You are essentially Walmart, with less less fluorescent lights and better fashion taste. You have no overhead, no risk, and no inventory except virtually. Best of all, you never even have to exhume your old printer from the basement to print postage labels. It sounds illegal but its not, and technically not even unethical. Retail stores do it. You spend the time researching and advertising, surely it is only fair you that you get your cut of the profits. The wholesaler is happy as his sales skyrocket and your customer is happy as they receive a professionally packaged brand new item directly to their door. You are happy as you slowly watch that $100 you had put away for that trip to the casino turn into $1000 virtually in a couple weeks. Jackpot. Even Uncle Sam’s happy as money changes hands in the “Hoover Dam” of economy boosting donations we call taxes. So why the stigma?
Well for starters it sounds rather felonious don’t you think? Drop shipping. Or you may call it Arbitrage, which is just as chilling. Can’t we call it something nice like “Stay At Home Retailing For Moms, Agoriphobic Persons, or Socially Handicapped”? Its a long name but less likely to arouse suspicion on a resume that you excelled as a previous drug mule. (I have aspergers. Thus I am allowed to reference social inabilities. I was the awkward one who didn’t cry at the end of Titanic at 9, and have the social grace of a former biker-gang member turned military coach.) The other reason that it has such stigma is that it seems like trickery. If you can find such good prices online for these products shouldn’t your buyer be aware of, and have the ability to use, these sources too? Well, they do, and they can. Then they would gleefully spend countless hours doing their own research, communicating with a wholesaler and managing to weed through the false advertising in order to buy one product. Nobodies going to do that for just one item. These good deals don’t just fall into your lap, and you as a Wholesaler/Consumer liaison have that duty. That is why you get paid.
Any profession involves work, be it physical, mental or technological. Think of K-mart. Would you become enraged if you discovered they paid only $10 for that tablet you are buying for $150? No, because you have neither the space or the finances to order 4382 of them at a time. (Mild exaggeration.) So imagine yourself as K-mart, without employees, or a fluorescent light filled electricity bill equivalent to the cost of your home. Also you will be much smaller scale. But equally, if not more so, deserving of compensation for your brilliant ideas and hound-like abilities to sniff out a bargain.
But don’t be fooled there are cons to this situation, and you do need a source of capital to start. How much capital you begin with ultimately determines how far in over your head will inevitably get, the first time you get excited at the opportunities that lie ahead. We all do it. I did. I got caught up in the hype of selling amazon gift cards via email on eBay for twice their worth, which is the going rate. Come on, I should have realized the only reason someone pays twice its value for an amazon gift card is for money laundering a hijacked account and cashing it out. Stupid, stupid me.
First I will get into wholesale product suppliers. I’m really not an advocate of Drop Shipping Online Services as, in my humble opinion, they are the key reason we all do that “in over your head” face plant the first time around. You want to start with one item at a time and develop a consumer relationship with one provider at a time, even if that means stalking their product page for a month. When I search the internet for corporate services and whole sale source providers, I often see the same company masquerading under different titles. They all want to sell you solid gold at about 10 cents a gram. Something’s wrong in that scenario, and even I knew that, the one who thought Gift Cards were just hard to find in some areas where they just fly off the shelf and sell out. See I’ve signed up with these companies, and in exception for a few, I found them all to be at least retail priced. Some were even more costly than retail and usually swimming in fees. How might one identify such sites? Well they aren’t rolling the dice when picking out their HTML Template, if you know what I mean. If you look closely their sites all have the same generic design and products, usually only changing in color scheme and price. Here is a list of some Drop Shipping friendly wholesalers that I trust, with reasonable prices. Let’s start with:
- Don’t ever, and I mean EVER, I beg of you, sign up for a shopping line of credit to obtain your merchandise. These sites will pose as credit cards for the credit challenged but they are lines of credit for their online outlet only. You WILL NOT PROFIT EVER. Their prices are so beyond retail that Movie Theater Concession Stands are speechless with admiration. Not only that but there is interest, fees, and application fees. Plus sending email fees, emailing emails to email you fees, and fees for the metaphorical tissues to wipe your e-commerce tears when you drown financially. I’m not going to point any FINGERS at any particular place, but they always say no money down and promise a guaranteed credit limit of way more than anyone with your credit score should be allowed. What they mean is a credit line of 150 dollars, which may buy you a set of silverware, and 50 of that goes towards your initial fee. Then as a proud new member, all that you receive at this point is the joy of browsing. Once you go to buy your silverware there is a 35 dollar down payment leaving you with about 60 something to spend. Oh shoot, with the shipping costs of 33 dollars you can only afford a pair of socks. These socks will ruin you, and possibly anyone associated with you, for life when it comes to credit and you won’t be able to get a secured prepaid collateral payday loan without uproars of laughter. Don’t do it. If they say no credit check, no employment check, and no down payment they mean they’ve ruined people. They’ve pillaged enough swarms of people to be confident that they can ruin someone as high risk as your neighbor. The neighbor who hid his car in your garage to prevent repossession, and asked you to pretend to be his boss if rent-a-center calls. That kind of confidence is trouble my friend.
- You know how they say “If it fits it ships” for USPS drop boxes? (This is for you who have to unfortunately deal with some shipping). Well it doesn’t ship if you have to shove, is my unfortunate experience. In fact just avoid the drop boxes for USPS altogether. Out of the 30 or so times I’ve used them, only about 10 items didn’t end up in the Bermuda Triangle called the “Dead Mail Center” in Atlanta. This is a facility that is fictitious I’m convinced, as they have no number or e-mail and you will never get your item back. It’s just gone. I like to think these prodigal items are being distributed amongst the poor, but they are probably just sitting in a pile somewhere. And nobody but you and your buyer cares, so if you use eBay get that nifty pay-as-you-go insurance application, it’ll save you in the long run.
- The last pitfall will be brief, due to embarrassment factor, and it also has to do with the unfortunate jungle of shipping etiquette. I know there are new eBay sellers out there this will help, and I know I’m not the only one who has ever done this. So when you go to actually pay for postage through eBay of course you want to pick the cheapest option. And as you mindlessly peruse your methods you see the cheapest option. But be aware, Media Mail is not just a catchy name for Cheap Shipping, it actually needs to be Media related. And they will know. And you will feel like I do telling this story right now. Again, slap your hand, and don’t do it again.
Well that’s my take on the ever more popular method of Drop Shipping, a profitable yet pitfall riddled minefield. But it’s a whole new world of opportunity for those of you who are picking up the pieces of their credit like I was, (I’ll turn the FINGER around for a moment), and don’t have much capital to start a business. So if you’re like me, and the thought of seeing another human being is something you could live without, it’s enticing. If the end of the movie “The Notebook” seemed technically endearing in theory, but not personally identifiable and everyone must be told, then yes drop shipping is for you. And on a side note if you said yes to that last part, maybe you have aspergers. I’d look into that, but that’s just my opinion.
May your wholesale hunting be fruitful, and your face-plants and perils be few, as you journey onward in finding your home business niche. If you are hungry for success you will find it, just keep your eyes open and your wallet will grow fatter. Watch out Wal-mart.
An eBay dropshipping business may be the answer if you are looking to finally quit your nine to five job or if you have recently been laid off in an economy that is in a downward spiral. Thousands of savvy entrepreneurs are realizing the advantages of drop shipping.
This little known secret enables marketers to run a successful retail business without actually developing a product or acquiring a single piece of inventory. In fact these smart marketers can offer their customers a wider variety of stock in their online stores without the hassle and expense of keeping inventory and storing products in a warehouse because dropshippers send the products directly to the customers.
To get started all you have to do is set up a seller’s account on eBay and find drop shippers who offer products you would like to sell, for example your could dropship bodybuilding products, electronics, toys, cosmetics, etc. Once you do this you can create auctions and start selling your products. After the auction is complete, the eBay store owner sends the drop shipping company all of the information including the customer’s name and address as well as the product purchased. From there the drop shipper fills the order and packs and ships it to the customer. The dropshipper will even use your company’s name, address and logo as the return address.
It is also very important to always ensure the reserve price you establish for your eBay auction exceeds the fee you will be charged by the drop shipper. Failure to do so may result in a financial loss for you. Generally a 10% markup on the price will ensure you profit from the auction but it is important to do research on comparable items to determine the market value. This will help you optimize your profits.
The main advantage of using drop shipping to start an eBay business is you do not have to worry about excess inventory eating away at your profits. With drop shipping you do not pay for an item until it is sold. This greatly minimizes the financial risk for you, the seller.