Drop Ship Your Way To WealthBrought To You By:

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Table Of Contents:

- Drop Ship Your Way To Wealth

- The Pros And Cons Of Drop Shipping

- Dropshippers, Wholesalers, And Your Image

Drop Ship Your Way To WealthYour customer sees a marvelous array of products on your website. After thoughtful consideration, she purchases the product she wants.

Amazingly, you have never actually seen the product. That is because your supplier shipped the order directly to her.

1. Problems With Stocking Inventory

After deciding what products you will sell, you are immediately faced with many challenges.

First: "To stock my products, will I need to rent store or warehouse space? I was hoping to sell by Internet, mail order, or export, but I don`t have much storage space for inventory at home."

Second: "Will the supplier even deal with me if I don`t have a retail location? I was counting on keeping my overhead down by operating from home."

Third: "I know that many manufacturers and distributors have a minimum order, sometimes in the thousands of dollars. I don`t have that kind of money!"

Fourth: "Even if I did have the money, why should I tie it up in inventory? How do I know if the product will even sell?"

Fifth: "I guess I will have to add extra insurance coverage for my inventory. Maybe I better upgrade my security system while I`m at it."

Sixth: "The shipping charges are going to kill me. First, I have to pay to get the goods here (freight-in). Then, I have to pay to ship the goods out to my customers (freight-out)."

Seventh: "If I expand and hire employees, how will I control the inventory? How will I know if my employees are stealing from me?"

Eighth: "How much time and money am I going to spend packaging and fulfilling orders?"

These problems can be reduced or eliminated by drop shipping.

2. Drop Shipping to the Rescue

Drop shipping is a method of selling products without stocking inventory yourself. You don`t need to stock inventory, because you only order an item when a customer requests it.

With drop shipping, when you make a sale you contact the manufacturer or authorized distributor and make arrangements to pay for the order at your wholesale cost. Your distributor then ships the product to the customer with your invoice and shipping label.

For example, let`s assume that you have just sold a product to a customer for $100.00 plus shipping charges of $15.00. Having received the customer`s payment, you now need to fax or otherwise send your order to your drop ship supplier.

You will need to pay your supplier, by credit card or other means, your cost of $50.00 plus $15.00 shipping. This leaves you a $50.00 gross profit. Your supplier will now ship the product to your customer.

With this arrangement of not having to stock inventory yourself, there are many advantages.

You eliminate the high costs of holding inventory. There is no need for you to rent expensive storage space, finance high minimum orders, get stuck with goods that don`t sell, or pay other expenses associated with maintaining inventory.

Indirectly, you do pay inventory costs. Your drop ship supplier must maintain his inventory and pay all associated costs, including freight-in, storage space, insurance, accounting, shrinkage, and so on. To make a profit, he must pass these costs on to you.

The real advantage to this drop shipping arrangement lies in keeping your costs variable. Instead of being stuck with these expenses up front, whether you sell or not, you pay only when you make a sale.

3. Profit From Drop Shipping

Many legitimate drop ship suppliers may not require you to have a retail location, but they will want to see evidence that you are in business. They may require you to produce a resale license or retail sales tax permit.

To be sure, there are pitfalls to watch out for in drop shipping. For example, some suppliers claim to sell at wholesale prices but are actually selling closer to retail. Also, margins are very slim in some competitive areas, such as electronics. However, with proper research and information, you should be able to avoid these problems.

Whether from your home, retail store, directly from your website or through an online auction, you can arrange to sell an item before you purchase it. That way you have nothing invested in inventory and won`t get stuck with stock that won`t sell.

Rather than financing and stocking inventory yourself, consider drop shipping your way to wealth.

The Pros And Cons Of Drop ShippingDrop 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, you send an email to the distributor and they pack up the item and send it straight to the customer with your company label on the box.

Drop shipping is a very popular option with sellers because it takes a lot of the grunt work out of selling on eBay. However, there are some major downsides to drop shipping - especially for new sellers.

Here’s a list of the pros and cons of drop shipping so that you can make the right decision for your business.

Drop shipping Pros

1. No storage room required

You don’t have to fill up your living room with stock and packing materials! This is particularly useful if you are selling large items such as kit-sets, furniture, sporting goods, and so on.

2. No shipping costs getting stock delivered from the distributor

Drop shipping means you don’t have to pay a carrier to bring stock from the distributor to your own storage area, which can mean big savings in the long term.

3. Spend more time on other areas of your business

You don’t have to organize the packing and postage system, nor do you have to drive to the post shop each day to post your packages. This gives you a significant increase in time to spend on other tasks such as marketing and communicating with customers.

4. No packaging required

You save money by not having to order and store packaging materials.

Drop shipping Cons

1. Can be Costly

You have to pay for the cost of the labor and materials involved in drop shipping. Generally this is between $2 and $5 per item. Many new sellers find that the additional costs of drop shipping greatly reduce their profit margins and sometimes nullify the whole operation. This is the main reason why drop shipping is not a viable option for some sellers.

2. You are still responsible for any shipping problems

So the item arrived damaged? Was there a shipping delay? You’ll get the flak for anything that goes wrong with the shipping even though it is technically out of your control.

3. Hard to find a distributor who will do it and do it well

Many distributors will not drop ship because of the extra paperwork involved. Then there is the matter of checking up on quality standards to make sure your items are being packed correctly.

4. Low stock levels may cause unhappy customers

Your drop shipper won’t necessarily tell you when they are running low on stock. If they run out and have to do a back order, you may end up spending a great deal of time placating a bunch of unhappy and impatient customers.

Drop shipping is a very appealing prospect for many sellers; however it is not always a realistic one. Despite the hassle, ‘doing it yourself’ can often be a more sensible option financially, especially for new businesses.

Dropshippers, Wholesalers, And Your ImageIf you are thinking about starting your own business, the eternal question of where to get your inventory is probably always on your mind.

Doing some research about where to get product always leads you to three options. You either buy it from a wholesaler, you import the items or you have another company drop ship it for you.

There is one option here that I did not mention and that is you can also make your own inventory. This option is usually not explored in the first portion of building your business.

So if you are debating between the drop shipper and the wholesaler there is a small discussion you need to have with yourself.

Obviously you will want to know if the wholesaler you are thinking about using is really a wholesaler instead of a middle man. The next question is the one that most people miss since they are worried about supply. That question is, “does this supplier sell a product that I want to put my name on?”

When you think of your business you want to build a brand and to build authority. If the product line is questionable in regards to quality, is that something you want to be working with?

Most people will only give you one chance since there is so much variety to choose from out there. If you get recognized as a seller with lesser quality items, it will be hard to shake that title. Starting right is crucial.

Using well known brands is a good way to circumnavigate those problems. Better known brands have already worked through the glitches of design and have engineered most problems out of the product.

It’s hard enough to deal with shipping problems, customers who change their minds, customers who are missing “the common sense” gene and the challenges of marketing, without adding brand or product problems.

Leaving that problem out of the equation calms the entrepreneurial spirit. The essence of being in business or starting a business is usually uncertainty and it does not make sense to add more problems to think about.

So now when you are thinking about drop shipping, look and see who your competition is for that particular product. Do your competitors buy from this company? Do they appear to move some volume? Do they have good search engine results?

If so chances are they are a good vendor. The same goes with wholesalers, check around. Go to forums and ask some questions. People that have had a bad experience are the first to speak out against a company that did them wrong.

It’s usually the only way they can get back at them. You can find out a lot of information without revealing the details or your business plan. Just keep in mind the question of “Do I want this company to represent my good name?”

I have a saying that I live by, I never let someone else have control of my success. I cannot and will not let another company make or break me. I would much rather go down in flames because of my own doing that allowing some other vendor ruin all my efforts. I think most people would agree.

You can get more information and guidelines on drop shipping by visiting our website:

- => Drop Shipping Website

Best Regards,