But what is drop shipping anyways?
To Drop Ship or Not: What You Need To Know About Wholesale Dropshipping
As ecommerce grows everyday, people are looking for ways to benefit from the great potential the internet has to offer. For newcomers to e-commerce or ebay selling, the hardest step is to find
legit and reliable wholesale products suppliers. Drop shipping is a quick and easy solution that can get you up and running fast, but you have to do it right or you can easily fail.
In many cases, ecommerce startups fail miserably for lack of research and planning. My goal in this article is to explain how drop shipping works. I'm also going to explain the pros and cons of dropshipping, What you need to do before even contacting your first supplier, and how you can avoid the most common mistakes that beginners make.
When you dropship products, you essentially have an arrangement with your wholesale supplier where by they ship your orders directly to your customers. In most cases, they will include your company name on the shipping labels instead of theirs. Some wholesalers provide this service for free while others charge a nominal fee for it. So, what does dropshipping mean for your business? Let me tell you!
Why Drop Ship Products?
There are many advantages of using dropshippers when selling online. Here are a few of them:
- You essentially get customers orders before you order them from your suppliers. This means that your initial investment is minimal, and in some cases none.
- No inventory to hold. This by itself is one of the big pros of drop shipping. You don't have to pay for storage fees, or invest in expensive merchandise, that might stay around for a while before it is sold.
- You can diversify your offerings as much as you want. You are only limited by finding the right dropshippers for the merchandise you want to sell.
Sounds good you say, but is there any disadvantages? Well this is life, and as any other thing in life you should expect some cons.
Why Not Drop Ship?
Obviously, there are also some cons that you have to consider. here is an idea about some of them:
- A lot of middle-men and scam suppliers. This is a big problem now, a lot of
wholesaler wanna-bes are springing on the internet everyday. You have to watch
out when choosing your drop shippers.
- Inventory volatility. In some cases, you might get an order for a product that is out of stock. You have to either refund your customer or have them wait longer than usual if the wait is not too long.
- Smaller profit margins. This is a major one as it directly affects your bottom-line. Like I mentioned before, many internet dropshippers are middle-men that are basically drop shipping to you! For that reason, they don't have the best profit margins, if any.
- Customer service issues and returns. Your customers don't know your suppliers, they know you. When they have any issue or request such as a refund, they will direct it to you. In that case you have to deal with those issue transparently and professionally. This might mean losses for you at times.
- You cannot control the quality, shipping times, customer service response of your suppliers. This might hurt your business at times, when you can't do anything about it.
What to DO Before Searching For Wholesalers
Well I didn't want to make things look so gloomy for your future online ventures, but a reality check is needed before taking any serious steps. Now you might ask, should I forget about drop shipping? My answer is NO. If done right, dropshippping could be a very effective strategy at least for jump starting your business. My advise is, if you are just starting out, and you don't have a lot of money up front, consider to drop ship your products. That doesn't mean that you jump at the first drop shipper that comes your way. You need to do your homework and find good quality products and good reliable and most importantly legitimate wholesalers that offer drop shipping services.
Study your competition and pricing. Look how your competitors are pricing their merchandise. Record a price range for all the products you might consider selling. Also, try to read some product reviews, and merchant ratings if available. On ebay look at how the sellers are laying out their auction pages, and who's selling, and what kind of demand exists. This is an essential step before even looking for wholesalers. When you do this you will also be able to see how
popular different products are. On ebay you can tell by the number of bidders. On comparison shopping sites, you can look at their popular products sections, which will give you an idea about what consumers are buying.
In conclusion, study your market and choose your products before you begin selling a single item. If you are on a shoe string budget, then consider drop shipping your products using reliable and legit wholesale suppliers. If you have some capital to invest I would advice buy bulk wholesale. You will get better prices for actually buying the merchandise. On the other hand that also means arranging a storage space...etc. So, decide what you will sell carefully and test different products first, ad then move forward with an expansion strategy.