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It may be a surprise to some people out there just getting their feet wet in e-commerce, but drop shipping has become the ultimate way for most small online retailers to operate. It's costly for companies to stock inventory that may go bad, get damaged, or go out of style. Your competing with Big box retailers who have their systems streamlined, marketing budgets galore and who have the cost to house the inventory, track the inventory, ship and receive the inventory down to a science.
Drop shipping is a win-win arrangement between you and the manufacturer or distributor of the products you want to sell. Drop shipping can work several ways. Classic drop ship means you call your manufacturer or distributor when you find a customer and they ship the product right to your customer's doorstep. Sounds simple enough and it usually is, however, just like most businesses there are things to be cautious about and pitfalls to avoid.
First, let's examine the classic drop ship process, which usually involves a fee to the Internet business owner. This fee can be a percentage of the price of the good sold, a cost to join their program, or a straight dollar amount such as $5 or $10 per item. In general this process works great and just takes a fax, phone call or email to the manufacturer to get the order processed and your invoice created.
One thing to watch out for are scam sites that say they will drop ship products for FREE and offer you 50-70% off retail price. I'd be concerned that the product is either extremely inflated (overpriced to leave room for a discount) or a knock off. Either way you may offer these products online but have a very difficult time selling them, so beware of these sites. Some sites can indeed offer this and may have purchased the product through liquidation (and again be cautious and investigate the quality of the product if possible).
A second way to be involved with drop shipping is to become an affiliate of the manufacturer or distributor. Joining affiliate marketing programs usually involve the manufacturer sending the Internet business owner a commission on the sale of the item as a reward for bringing them the customer. The manufacturer handles the order processing and drop ships the product directly to the customer. In most cases, the Internet business owner will never know who their customer was or what they ended up buying. They just receive a commission check in the mail. It's a bit watered down from the straight drop shipping method, but the Internet business owner never has to own any inventory and doesn't even need to call the manufacturer to get the order processed.
In both methods the results can be rewarding and a great way to expand your product line and your bottom line.
About the Author
I am the owner of National Dropship website and have been in the retail business for over 15 years and online for over 10 years. My experience in retail is mostly with inventory such as gifts, collectibles, cosmetics, skin care, purses, jewelry and accessories.
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