| What is Dropshipping | | | | and one off items. |
| Dropshipping is a type of retailing where the retailer | | | | Advantages of Dropshipping |
| does not keep goods in stock, but instead passes the | | | | Working with dropship companies has numerous |
| customer's order and shipment details to the | | | | advantages for small companies and individuals looking |
| wholesaler, who then dispatches the goods to the | | | | to earn part time or even full time income. Following |
| customer directly. The retailer makes their profit on the | | | | are some of its benefits. |
| difference between the wholesale and retail price. | | | | - The dropshipper researches for products and |
| Some retailers may still keep "show" items on display | | | | provides their lists/catalogues of available items at |
| in stores, so that customers can inspect an item similar | | | | trade prices - one can sell any of these items by any |
| to those that they can purchase. Other retailers may | | | | method they wish |
| only provide a catalogue or Internet presence. | | | | - The dropshipper acts on the order - Only when the |
| Drop shipping can occur when a retailer receives a | | | | item has been sold and the payment has been |
| single large order for a product. Rather than route the | | | | received, the dropshipper is asked to fulfil the order |
| shipment through the retail store, the retailer will | | | | - The dropshipper packages the orders - No |
| arrange for the goods to be shipped directly to the | | | | packaging costs are involved at the end of the seller |
| purchaser. | | | | - The dropshipper sends the orders out direct to the |
| Let us assume, you purchase an item from a | | | | customer - No delivery costs and efforts are |
| dropshipping site for $20.00. You would sell that item | | | | associated with the seller |
| for a price determined by you; let's use $35.00 plus | | | | - The dropshipper is transparent to the customer - As |
| $4.50 shipping for an example. After you collect the | | | | far as the customer is concerned their purchase has |
| total payment of $39.50 from the customer and their | | | | come directly from the seller |
| mailing address, you would forward the $20.00 plus | | | | - The dropshipper holds all the stock - No warehouse |
| $4.50 for shipping to the wholesaler, and keep the | | | | or storage issues at the end of the seller |
| $15.00 as profit, never having to touch the product, as | | | | - All the seller has to do is concentrate on sales and |
| the wholesaler ships it out to the customer. | | | | marketing and banking the profits! |
| In short, dropshipping is simply selling products for | | | | Dropshipping Pitfalls |
| wholesale companies, sending them the address of | | | | While it is true that the profits can be gigantic, the seller |
| the person who bought from you, and they ship the | | | | effectively has to rely on the goodwill and |
| product to them. This is an incredible opportunity, most | | | | professionalism of the dropshipper/wholesaler. |
| times for the cost of a meal at a restaurant, to start a | | | | Eventually, one should always keep in mind that should |
| profitable eBay business. | | | | the deal go raw (for instance, the dropshipper |
| Many sellers on eBay also drop ship. Naturally a seller | | | | supplying a faulty product or a downright incorrect |
| will offer an item as new and ship the item directly | | | | one), it will be the seller's reputation that will take hit. |
| from the wholesaler to the highest bidder. The seller | | | | The end buyer cares nothing for whether the seller |
| profits from the difference between the winning bid | | | | used a dropshipper or not; all they truly care about is |
| and the wholesale price, minus any selling fees from | | | | receiving the product that they paid for. For that |
| eBay. | | | | reason, dealing with unconfirmed dropshippers can be |
| Finding Dropshippers | | | | risky. |
| Startups and individuals new to the dropshipping world | | | | Additionally, profit margins can be low when working |
| generally face severe difficulty in finding legitimate and | | | | with smaller dropshipping companies. Typically the |
| authentic dropshipping companies. Several online | | | | biggest discounts from manufacturers go to larger |
| directories have popped up in recent times on the net | | | | volume resellers who further pass their discounts to |
| which help to make this task easy. | | | | sole traders and individuals. Using smaller dropshipping |
| Whilst looking for dropshippers, there is a general | | | | companies one might end up paying much more per |
| misconception that dropshipping companies who | | | | unit of product than by contacting manufacturers |
| charge an initial fee to sign-up and open accounts with | | | | direct. Most manufacturers refuse to deal with |
| them are not considered genuine. Although this might | | | | individuals, but many will offer low volume quantities at |
| be true in some cases however the reason for | | | | wholesale price. For a fast selling product it could be |
| charging this fee is that, these companies want to | | | | worthwhile buying small quantities directly from the |
| make sure that they are dealing with genuine traders | | | | manufacturers. |
| and not individuals merely looking for quick bargains | | | | |