Wholesale Products, No Inventory, No Investment… Sound Good?
Understanding How Drop Shippers Work
If you are starting to familiarize yourself with different business models, the chances are very good that you will end up hearing more about drop shippers and how this process works. Basically, drop shipping is a management technique used by supply chains where the retailer chooses not to keep any inventory in stock. Instead, they will transfer the orders from their customers and any details of the shipment at hand to a wholesaler or the manufacturer. Once the order is fully transferred, the merchandise (hopefully wholesale products) are then shipped directly to the paying customer.
When speaking of retail businesses, a vast majority of retailers will make quite a bit of profit on the monetary difference between the wholesale price and the retail price paid by the buyer. In some cases, there are retailers that will make a percentage that has been agreed upon in advance out of the sales in commission that is paid by the wholesaler out to the retailer.
There are some retailers who work as drop shippers that will keep actual display items up in their brick and mortar retail locations so that all of their customers coming through will be able to view and inspect the items before they purchase. However, the majority of those who are working with drop shipping might provide only a websites or online portal to sell their products or a catalog that has a full listing of all of the goods that could be sent out via drop shipment.
There are some retailers that use the drop shipping process to move merchandise that will take a number of measures to try and hide their methods. In some situations, there is a certain level of stigma that is involved. In other situations, this process is hidden to try and preserve the wholesale source so that other retailers are not able to get in on the inventory at hand. There are some shippers that will also offer goods through blind shipping, which is where there is merchandise shipped without any sort of a return address.
Along the same lines is private label shipping, where the items are sent out from a wholesaler with a return address that is fully customized with the information of the retailer. You can also have a customized packing slip included with the order that will have the name, logo and any contact information included from the retailer.
Drop shipping will sometimes take place when there is a retailer that normally sells smaller quantities to the general public and then receives a single bulk order for a certain product. Instead of routing the shipment through the physical retail store, the retailer has the ability to arrange for the orders to be sent out directly to the customers. Such drop shipping is also quite popular with some bigger ticket items where a retailer will simply take a deposit and then have the item shipped right out to a building site or location from the actual supplier.
Believe it or not, there are numerous wholesale drop shippers who sell on the most popular auction sites. The seller will work by listing an item as brand new and then once it is sold it is then shipped out directly from the wholesaler or retailer to whoever the highest bidder was. The seller of the auctioned item will profit from the difference between the winning bid that they received and the wholesale price that they have to pay. Of course, this profit comes after any of the merchant fees or selling fees are paid to the auction site that they are using.
Private label shipping, as mentioned earlier, is a fast growing trend in the business of drop shipping. There are a wide range of items that are shipped each and every day through private label drop shipping including keepsakes, nutritional supplements and vitamins and even apparel that is customized with text or logos. Basically, if you can sell it, there is a way to have it drop shipped out to your customers.
When looking at drop shipping companies and the process, you are going to find that there are several benefits. First off, you have the positive cash flow cycle, where the seller gets paid whenever a purchase is made. The seller will usually end up paying the wholesaler either using credit terms or a credit card.
Drop shipping is also a great way to offer a wide range of products to your customers without having to worry about holding onto a whole lot of inventory. This works out perfect for sellers who are limited on space and want to supplement their income from home via auction websites and other selling outlets. If you are interested, you too can join the ranks of the other drop shippers. All you have to do is have a desire to sell and technique. Free Drop Shippers are out there as well as some you might need to pay a fee too.
What are “drop shippers”? Someone said i could sell items i got from drop shippers without investing money or shipping stuff?
Need to find a legitimate drop shipper?I want to start selling women’s clothes, sunglasses and shoes on ebay but I have no idea where to find legitimate drop shippers selling modern, young clothing styles. Prefer something fashion forward and unique from Europe or America possibly.
Search Google, using the search terms “Drop shipper,” but be prepared to sift through hundreds of scam sites that don’t really care if you make a penny off of the deal. A legitimate site will not ask you to pay a fee. They will want to become your business partner so that you will both profit by the sales that you make. These firms are out there, but finding them takes time.
Examine the products that the drop shipper offers. Do they sell? Go to eBay and do a completed auctions search for the product. The information on how much the item actually sells for is vital. You will frequently find that your drop shipper wants to charge you more than the item actually sells for on eBay. This is the most basic, sensible check that you can perform. Do not believe promises made about new merchandise coming online from the drop shipper unless you can confirm them, actually see the products and test how well they sell.
Search online and through business directories that you can get at your local library for small manufacturers that are not yet drop shipping. Your goal is to find a firm that will let you be the exclusive seller of their products. This way, you eliminate hundreds or thousands of other sellers online who want to compete with you. Get a contract that gives you exclusive rights.
Attend trade shows. Trade shows host thousands of product manufacturers who might be willing to drop ship for you. The show only lets trade professionals in, so you will need to print up professional looking business cards and register with your state to get a tax ID number, or in some states, a permit. This is a small price to pay for access to the real thing, manufacturers who are not out to scam you. Do a Google search for “Trade shows” and of the product that interests you.
Attend manufacturers’ conventions. Focus on an industry that interests you, and find out, through a Google search, where their conventions will be held. Make sure that you read and satisfy the requirements to attend. While there, you will be able to talk with the people who create the product that interests you, and who are looking for a way to sell it. As Charles Allen, a manufacturer’s booth expert, points out, manufacturers are hungry for good sellers of their products. This is the place to find them.
Read trade publications. For example, if you are interested in selling toys, Toy Directory Monthly, or TD Monthly, is a good source. Most of these publications give tips to buyers and sellers alike, and are available online.