Dropshipping

Dropshipping is an easy and cheap way to work online without having to take care of inventory.  You being the retailer, pass the order to the wholesaler who fulfils the order and sends the goods to the customer.

PROS: 

Dropshipping is relatively easy to set up and does not cost a lot of money to get started.

Low overheads. Overheads are very small compared to regular business. There is no warehouse to pay for, no retail outlet. minimal staff and really can be run from any location with a laptop.

Run from Anywhere. You can run your drop shipping business from anywhere you want to. As long as you have an internet connection, you can work from anywhere.

Sell anything you want. It is best to have a particular niche in a market to attract return customers but this niche can be any thing you want. As long as you can find a supplier.

CONS:

High competition. Because it is so easy to set up drop shipping, there are a lot of people doing it. This does not mean you wont be successful, but it does mean you need to be smart with strategies to attract customers to buy from you.

Low profit per sale. Customers are becoming more and more price savvy and will compare prices with a variety of locations. As it is easy to set up, merchants will set up and sell at lower cost to attract more sales.

Shipping costs.  Having a variety of suppliers will create a variety of shipping costs. You can pass these to the customers but you need to be careful to not be seen as overcharging the customers. Often you will have to bear the cost of more than one shipping fee.

Inventory errors. As you do not control the inventory or distribution, you may run into trouble with out of stock items or order errors that you have to deal with.

 

Finding Suppliers

You want to find Wholesale Suppliers. Sometimes a simple internet search is not the best way of finding suppliers. You want to make sure your supplier is really a wholesaler and not a retailer posing as a wholesaler.

  1. Contact Manufacturers and ask for their wholesaler list
  2. Attend trade shows, this is a great way to network and meet wholesalers and manufacturers.
  3. Online Wholesale Directories. many directories charge for the use of the directory, but most of them are vetted for genuine wholesalers. SaleHoo is probably one of the cheapest at just $67 a  year.

 

7 comments

  1. Thanks for the information, I didn’t know something like Drop shipping was one of the ways you can make money online. My dad spoke to me about something like this, but I didn’t know what it was called until I read your article.

    I have a question, if someone like me wanted to get into this type of online business what are the steps to getting started exactly. Your article explains what it is, but doesn’t exactly tell you the steps on how to get started.
    So If I wanted to start an online drop shipping business where do I start?

    1. Hi Beatrice,
      I am in the middle of an article on Shopify, which explains how to set up a Drop Shipping store. Once posted I would love to know your thoughts.
      Thanks for stopping by
      Sharon

    2. Shopify! It’s a pre-made store all you do is create it to your preference and add products! Great thing about Shopify is you get apps for it that help you with everything basically putting it on auto pilot so all you have to do is check it once a day! It does cosy monthly however it’s way worth it compared to making your own site from scratch which end a up costing more…then you have to pay for advertising to drive traffic to your store but that sums it up in a nutshell!

  2. Hi Sharon,
    This is very interesting information. I’ve heard of drop shipping and wanted to learn more. I am glad that I read your post, it’s given me more insight. I think this is something I will continue to keep my eye on for the future.
    Thanks.

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