What is Dropshipping?

Drop Shipping has become very popular with Internet retailers as they don’t have to deal with the challenges or expenses of purchasing and storing stock. They also don’t have to pack and post orders as the drop shipping company deals with all of it. The online merchant can focus on improving and marketing their website while the dropshipper deals with the wholesale merchandise and getting it delivered to the customer.

Drop Shipping companies are basically wholesalers that also drop ship their merchandise. They receive individual orders and payments from retailers and then send the product to the customer.

How Drop Shipping Works

1. You have created your online store selling Fishing Tackle supplies and somebody just ordered a fishing rod and some lures.
2. You started your Fishing Tackle store online with very little money, so you definitely didn’t have $10,000 to buy bulk wholesale merchandise. You’re using a fishing tackle dropshipper and the order that your customer just submitted goes to your drop shipping company who has the fishing rod and lures in stock and ready to deliver.
3. The Fishing tackle Dropshipper then picks and packs the fishing rod and lures for your customer.
4. They then send the order with your Fishing Tackle store details included.
5. You collected $150 from your customer for the fishing rod, lures and postage. Your fishing tackle dropshipper has charged you $100 for the products and postage. You give the dropshipper their $100 and you keep $50.

Not only do people with online retailing websites profit from the conveniences of using a drop shipping company, but so do people selling products through online auctions like eBay. As long as the products they list on eBay sell for more than the wholesale cost of the product, plus shipping expenses, the person will profit from auctioning merchandise. Successful eBay sellers or Power Sellers have created large streams of income by auctioning drop shipped products online. Products that they themselves have never touched and have only paid for after their customer has first paid them.

The benefits of using a drop shipping company can be massive. Depending on the number of products needed to function properly as a business, it could cost tens of thousands of dollars just to purchase a minimum amount of stock.

After purchasing your initial stock, you would then have to rent a space to store the merchandise. Then you would have to deal with postage and packaging which can be a very time consuming job after you start getting a decent amount of orders each day.

But if you create a relationship with a drop shipping company, they already have the wholesale merchandise and the resources available to deliver them to customers. The dropshippers have made it their business to hold a lot of stock and to post items to customers in a timely manner. They already have the systems in place to deal with storage and postage.

The drop shipping company benefits by selling more products and the online retailer benefits by saving on the costs of purchasing and storing stock. So both parties profit from drop shipping.

It has also been called “Blind Shipping” as it can be merchandise shipped to the customer without the return address of the wholesaler. It can be arranged to have the return address of the dropshipper or the online merchant. Good drop shipping companies also deal with returns, which makes things easier for the customer and the retailer.

Drop Shipment or Drop Shipping can be a very rewarding and profitable business to be in for both the drop shipper and the retailer, but like any profitable business there is a lot of hard work involved. Don’t be conned into accepting offers that seem too good to be true as there are a number of unscrupulous people out there looking to take advantage of those that are new to the industry.

Do your research. Ask questions. Then if the dropshipping business still sounds good to you, then good luck. It can be a very rewarding business to be in.