Make Money With Dropshipping

If you want to sell products, but not carry a huge inventory, dropshipping may be for you.  In a dropshipping arrangement, you sell the product, but the manufacturer or distributor ships it.  You keep the difference between your retail price and  your supplier’s wholesale cost.

Put simply, the steps are:

You list a product on your website or on another site, such as eBay.

Your customer buys the product and send you the payment

You order the product from your supplier and send them the wholesale amount

Your supplier ships the order to the customer.  Many times, this is done under your label so the customer believes the order was shipped directly by you.

This arrangement works out well for you and your supplier.  You get the benefit of being able to offer a large number of items without tying up your capital in in inventory.  The supplier gets a sales agent (you) who only gets paid when product is actually sold.  It’s a real win/win arrangement.

Here are some things you should look for in a dropshipping partner:

How much does it cost to join?  Most legitimate dropshippers do not charge a fee to enter into an arrangement with them. They may require that you have a valid business license and/or sales tax permit, but this is mainly to make sure that they are dealing with businesses and not selling directly to consumers.

Will they protect your privacy? It would be very bad for you to go to the trouble of getting a customer only to have the customer stolen by your supplier.  Most dropshippers will ship the order under your label to make it look like the order came directly from you.  They don’t include any catalogs or sales material in the package.  Some suppliers, however, don’t follow this rule.  They will start selling directly to your customer and cut  you out of the deal.  Before working with any supplier, make sure that they will protect your relationship with your customers.

How is their inventory?  I’ve worked with some dropship suppliers who never ran out of a product, or so it seemed.  Others, on the other hand, never seemed to have anything in stock.  They were always sending out backorder notices. I would highly recommend placing a few test orders to check for inventory, shipping and delivery issues before promoting the products.  After all, if they drop the ball, your customer is going to think you did.  After all,  your name is on everything.

Is your supplier the real source?  Is your supplier the actual manufacturer or importer or are they another reseller?  This is important too.  In order to get the best prices possible, you want to make sure that you are as close to the source as possible.  The more resellers or “middlemen,” the more mark-ups the prices go through.

Once you’ve chosen a supplier or two (or 34), now it’s time to sell the product.  You can do this through your website or through catalog sharing or any number of other ways.  I would suggest that you stay away from auction sites like eBay, however.  I know this flies against what a lot of gurus are saying, but the reasoning is simple:

Most auction sites require that you have the item in your possession.  With dropshipped goods, that’s not the case.

If your supplier is late in shipping, you get negative feedback.  If this happens often enough, you’re out of business.

You cannot vouch for the condition of the item when it was shipped, but your buyer will still hold you accountable for it.

Aside from auction sites, I’ve found dropshipping to be a very worthwhile part of my business.  Like anything, it requires effort to start, manage and promote.

I hope you’ve found this article helpful.

No related posts.