If you're not familiar with this term, let me explain it. Drop shipping is when a company will sell you a product at a discount and then ship it directly to your customer. It keeps your inventory and overhead to a bare minimum and you keep the profit. The reason some people think drop shipping is bad is because there are some pay sites that offer drop shipping that are scams. You actually pay them to allow you to sell these items and then they don't follow through, or they make it almost impossible to actually make a profit. They sometimes they say they have the item that your customer just bought and you find out they don't. This can be a business killer; I mean if I order a product from a website I expect that company to ship it. Don't you?
Researching Online Companies
There's a way around this type of "drop shipper" and it's called "Doing your own research"! That's right, a little hard work and lots of time and you can have a successful business using drop shipping.
Some companies have a wholesale/reseller link but never mention drop shipping. I'm not quite sure why they don't but it's their company. This is where the hard work comes in. After you've researched what you want to sell contact those companies and ask if they have a drop ship program. All they can say is "No", right? If they reply that "Yes, we do!" you then need to ask about their terms and what percentage of each sale you get to keep. I learned the hard way that if it's below 30% it's probably not worth the time and effort. Once you agree with their terms, sign up to sell through them. The drop shipper may ask for a tax id. The company will never ask you to pay them to sell their items.
Drop Shipping Requires Work
Drop shipping really is a hard job, just because they are making the items and shipping them doesn't mean you won't have work to do too. You'll have to update your website, place the orders, keep in contact with your customers and keep them updated on shipping statuses or returns. You NEVER refer the customer to the drop shipper, ever! That is very bad for business and makes you look unprofessional.
Running a Virtual Business
There's much more to starting a business using the drop ship method, such as deciding on a domain, finding the website/shopping cart that is right for you, and marketing your business. I promise not to leave you hanging, I plan to write a series on all of these, so keep your eyes peeled for more to come. Also keep in mind that I am not an "expert" and you may have even better ideas and I want to hear them. Feel free to contact me or leave a comment to share your ideas with us all.