When starting an online business one of the key elements is selling products. So how do you get products and where do you find them how do you know if they will sell and how do you get them to customers?
In the vast world of internet entrepreneurship there are many answers to all of these questions. You can create your own product – but it can be a long and time-consuming process. Alternatively you can buy in bulk from the manufacturer and ship the product to customers when they buy. but that is an expensive solution and you have to risk investing that money in buying inventory without selling it which can be especially troublesome if you’re dealing with perishable items to fashion items.
There is a solution that will keep you out of all these troubles. It makes the entire startup process of your online business easier. It’s called drop shipping. It has taken the online business world by storm. Purchasing business is one of the easiest and fastest businesses A low-risk way to start an online business.
Check out how to start a drop shipping business how the drop shipping business model works and the key things you should know before starting.
The following table can help you with your decision-making process and outlines the pros and cons of starting your own drop shipping business.
Advantages Sell almost any product in any niche Uses a proven business model and is even used by large retailers like Amazon No inventory to store No packaging or shipping required No upfront capital All companies are willing to drop the shipper. The shipper must give you an accurate stock number so you don’t sell the item if the shipper is out of stock. Some shipping suppliers have inconsistent service slow shipping times or difficult return policies.
Starting a Drop Shipping Business
Estimates vary but industry watchers have found that 20% to 30% of online retailers use drop shipping. So it’s a proven business model and if you go down this path you’ll be well-fed. Even big retailers like Amazon use drop shipping.
With drop shipping you can sell almost any product in any niche. Consider that almost any product can be purchased on Amazon.com – if it’s sold on Amazon you can also sell it through your own dropshipping business.
The benefits of drop shipping someone else’s product mean you don’t have to deal with the hassles of traditional business such as:
- Store your products (buying a lot of inventory and renting warehouse space can be very expensive)
- Pack or ship the product to prepare the order and box and go to the post office multiple times a day
- Must put down money first to buy products wholesale to resell products you are not sure will sell
When you start your business with drop shipping you avoid these issues and the potential loss of any up-front capital investment.
In addition to all of the above benefits you don’t have to worry about building or leasing commercial space to hire employees and have large wages or have to stay in a physical location during regular business hours.
Now that you understand the benefits of a drop shipping business here is how the business model of a drop shipping business works.
How Drop Shipping Works
With drop shipping you can work with a wholesaler or distributor who offers this service. Not all manufacturers and wholesalers offer drop shipping but many do.
You handle all the marketing for your business. That means you set up your website with a shopping cart (or a virtual storefront on Amazon) write your blog for social media and email marketing and any other way you can connect with prospects and customers. you will tell them all about product and use your marketing and sales skills to tell them how the product will improve their lives. Essentially you do all your marketing advertising and promotions to attract customers and make sales.
This is where the shipper takes over when it comes time to actually send the product and fulfill it. The shipping company has inventory in its warehouse. You send your shipper an order paying wholesale price per order.
This can be done via email or spreadsheet documents submitted online – depending on the shipper. In many cases this process can be fully automated freeing you from the mess and saving you time so you can focus more on marketing your business instead of your business. A dropshipping company puts the order together and ships it directly to your customer without including any pricing details or information about the supplier so that the customer thinks the package is coming directly from you.
Direct airlines do charge for this service. Every company is different but typically it’s around $2 to $5 per item or order often called a handling or dropshipping fee. This is based on the combined wholesale price of the product itself and shipping costs.
However despite the lower profit margins you can still make a profit as a drop shipping business. If you want to increase your profits you can raise your prices – at least as far as your market can bear. You can also sell more sales. You can always contact your shipper to negotiate Lower handling fee.
Another tactic is that you can so-called white label or private label the products you sell which means you put your name or brand on them so you can identify yourself with all those who sell the exact same product Competitors are differentiated. This allows you to avoid price.
But remember you’re not risking money up front. You only pay these fees when you actually sell the product.
What Products Can Be Drop Shipped?
As with any online business you want to enter a market that is “hot” and has a large number of people ready to buy what you sell. In the best case your area of specialization should also match one of your personal interests.
If you have a passion for a market or a certain type of product that passion will make your marketing efforts stronger which in turn will make your business stronger. Not only that but you’ll actually enjoy what you’re doing which will make your job feel more enjoyable.
Fortunately there are drop shipping companies for almost every market niche and product type. This includes baby supplies yoga clothing electronic clothing art books beauty supplies supplements home and garden supplies and more.
A good place to check popular niches is the big online e-commerce platforms like Amazon and eBay. Regardless of what’s on your bestseller list it could be a great fit for a drop shipping business. But also pay close attention to the trends you see on Facebook and other social networks. Also looking for products that match Be in the news and hear what your friends and family are talking about.
Products can do well during the holiday football season the start of school and other special times of the year.
A big mistake a lot of people make when starting any type of dropshipping business is that if they see others doing it they think the competition is too high for them to make money from it. Nothing is far from the truth. If you see a lot of competition A sure sign of a huge healthy profitable market.
Remember that while you can sell products that are trendy and/or seasonal you also need to make sure that you are selling evergreen products which means there is always demand for them and sales will be more consistent.
Picking a Drop Shipper
Before you start working with a shipper go through the order process yourself from the customer’s perspective. It’s important to understand how long it takes for an ordered product to ship easily and how the shipper handles any returns or issues.
Ask potential shippers how they will inform you about the inventory levels of each product. If you sell an item to a customer but the shipper is out of stock it can cause you a huge quandary and provoke angry customers.
This will also give you the opportunity to see the quality of the product. Ensuring the quality level of your products makes you proud of your customers. In some cases the shipper is willing to send you a free product for evaluation or at least sell it to you their cost.
If you are in a niche market and have used other similar products you can test the product yourself. Use it to study it and see if it lives up to the promise. Is it made of quality materials or ingredients? Check out other people’s reviews online to see if your experience matches.
If you don’t like this niche ask a friend or family member to try the product. Research can also be done by thoroughly examining online reviews and forums in the field for any comments from users and any relevant Facebook groups. Knowing the product will also help you sell it for marketing more real and effective.
Here is a list of some of the top shippers and shippers operating today:
- Sunshine Wholesale
- Dropship Direct
- Worldwide Brands
- Oberlo
- Salehoo
You can also search for drop shipper or (niche) + drop shipper on Google to find other drop shippers.
Key questions to ask potential drop shipping partners
Partnering with a shipper is a great way to start your online adventure with minimal risk. By not having to spend a lot of cash to buy products wholesale you are not risking money. You don’t have to store any inventory or worry about keeping up Ship products to customers in a timely manner.
But that doesn’t mean you should hand over these important elements of your business to anyone. Working with a bad shipper – they are there – can ruin your business before it even takes off.
You don’t have to blindly find and negotiate with potential drop shipping partners. Here are some key questions to help you decide if they’re right for your business.
- After a customer places an order how long does it take to process and ship out of their facility? (Remember you can also buy them secretly to verify this)
- What methods are there for shipping products? This is especially important if they are located overseas and ship internationally. Do they use services like UPS and FedEx? Can customers place orders overnight? Do they only rely on the US Postal Service?
- Here’s the big question: Do they have a tracking system so you and/or your customers can easily see the status of each order? This is one of the most important things a client wants to be able to do.
- How do they deal with things like lost goods? You don’t want customers to be frustrated by issues that are beyond your control. Remember as a seller you are ultimately responsible for customer service. Will lost cargo cost you money?
- Are the products they offer guaranteed/guaranteed? What if the customer is not satisfied with the product – what is the return policy? Does the shipper guarantee the product? What happens if the product somehow fails?
- Make sure your shipper’s policies match your customer service philosophy. If the customer feels they are being taken advantage of you can’t point the shipper and blame them because you are the one selling the product to the customer.
It’s also a good idea to check forums blogs and social media for reviews of drop shipping companies from other online entrepreneurs. Shippers with bad reputations or bad business practices can quickly and often be exposed in detail so you can avoid them.
Dropshipping is one of the easiest online businesses
An online drop shipping business is a fast easy and low-risk way to sell online. You don’t have to invest a lot of money up front on inventory that may not sell your drop shipping partner will handle all deliveries to your customers.
Pick the right niche and product and you can have a profitable business. You can even expand into other niches and sell other products.
