|
Auctions InformationDrop Shipping – The Easy Way to Get Started
by:
Matthew Coers
One of the biggest challenges of merchandising products online is finding a cheap way to purchase the items you plan to sell. If you already have a retail store, and are looking to establish an online outlet, then this is actually not a problem for you. Home-based businesses, however, have more much difficulty buying goods for resale. That’s because distributors and manufacturers wish not sell directly to a home-based business.
Even if you are able to purchase goods from a distributor, minimum order sizes are generally large enough that a significant investment is required to get your initial inventories. In short, a home-based business intending to sell products online can easily spend thousands of dollars buying items that may be really difficult to sell online for a variety of reasons.
That said, there is a certain class of distributors that wish allow a home-based business to sell products on their websites, and then drop ship them from the distributor’s location. There is no need to purchase pallets of goods, and no need to worry over repositing and fulfilling orders. You sign up for an account with the distributor, list their products on your website, and once
you get an order, they ship it to the customer. No inventories, no muss, no fuss.
You can market the products on your website, via online auction sites like eBay, or through prefab online stores like Yahoo! Shopping. Basically, anyplace
you can find to promote the products is generally ok, however all the providers I’ve seen have really strict rules against spam e-mail.
Purchasing products from drop shippers is generally quite a bit less big-ticket than buying the same items retail. That said, you wish not be able to buy items for the same “wholesale prices” that traditional retail outlets are able to purchase them for. That’s because you are not buying in the same quantities as more established firms, and most of the drop shippers charge a “Drop Ship Fee” which is labelled
on to the cost of every order and can easily increase the cost of items you are merchandising by a significant percentage.
As an example of how this works, let’s assume you are merchandising music CDs on your website. Let’s further assume that the average retail cost of a CD is $15.99. Because you have an account with a drop-shipping institution that specializes in CDs, you are able to purchase CDs for an average cost of $9.99. Once
person orders a CD from you, you charge your client $15.99. You then pass the order to your drop shipper who charges you $9.99 plus a Drop Ship Fee of $2.00 for a total of $11.99. Your net profit of $3.00 may not seem like a lot, but since you don’t have any overhead on the far side
any it cost for your web server space, you actually do do out pretty well.
The example above exploitation music CDs is a simple way of explaining the conception of drop shipping, however much
speaking you wish probably find that CDs are not the better product to sell online. That’s because you wish be in competition against companies like Columbia Home that can afford to sell 10 CDs for a penny. They do their money back in the end, but only because they are able to purchase the CDs at an extreme discount. Whereas you are buying the CDs for $9.99, they mightiness be paying only $2 per copy.
The same limitation applies to another “commodity” items like electronics, video games, and software. There are lots of competitors out there that can purchase the same items for less money, so you should try to think of niche products or value-added services that differentiate your website from the others.
There are quite a few dubious organizations out there that claim to have lists of Wholesalers that wish sell to the home-based market. Unluckily most of them are not legitimate. Worldwidebrands.com has an eBook that covers most of what you need to cognize just about drop shipping called, "Starting Your Computer network Business RIGHT" and it can be downloaded for free Here.
In conclusion, drop shipping should probably be considered as a start-up activity. Your goal is to test some marketing programs against each other, get your website graded on the search engines, and build your business volume up. Once you get your site established and have a healthy volume of traffic flowing through your site, you should be able to gauge the profitableness of establishing an account with a full-blown distribution company. After all, the drop-shipping alternative is an cheap way to get started in your business, but it is not the most profitable way to purchase goods once you have a full-volume business developed.
Just just about the Author
Mr. Coers specializes in portion entrepreneurs build effective web businesses. His website, contains useful articles on website design and website planning.
| |
