Drop Shipping Explained

by Dan on November 16, 2009

Drop shipping is basically a method of selling goods online without an inventory or having stock. Once you advertise a product online and a customer buys that product, you will then place the order and a third party company will send the product to your customer.

The customer pays you, you pay your drop shipper and you keep the profits.

Choosing a drop shipper is the first step. There are many around the world to choose from so here are some tips on what to look out for.

  • Look for an agent with little or no start up fees, many may charge you a large start up cost that can be over £100. Others may allow you to join for free but require you pay a monthly fee, which may be around £30. There are those available that require neither, but may not have as low of a wholesale price for the product you require. Therefore, do your research and look for those that suit your requirements.
  • Compare agent’s wholesale prices for the products you intend to sell. Look for those with the lowest prices and minimum monthly charges if applicable.
  • Check the variety of products and if they are frequently available. Some agents only have limited amounts of items for a specific period of time.
  • Check what extras the agent can offer you. For instance, some offer discounted websites, free profit management tools and even free item descriptions and pictures that can be used in your product listings.

Drop shipping is good for those that have a desire to work from home and wish to sell products. However, despite an agent handling the distribution of your customer’s order, you still need to work at marketing and advertising your product. This can be done via social networking sites, forums, auction sites and even your own website.

The main advantage to this business is most of the time you will have a positive cash flow. This is due to the fact that you do not have to pre-buy stock and you do not pay for the item you wish to sell until you have a buyer.

The profit margins are not huge with drop shipping as the agent takes a cut also. This is usually incorporated within the price at which you will initially buy it. Selling a large quantity of items is how you will make more money.

If you take the time to compare both agents in terms of what they can provide you as a seller, and research your target market in relation to the products you wish to sell, drop shipping can be an exciting and profitable online business.

Dan Signature Drop Shipping Explained

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