Dropshipping 101

Small business owners can benefit from implementing a drop shipping program. The same is true for the aspiring entrepreneur considering opening an online store. Drop shipping can be one of the simplest ways to start your own business, and one of the most lucrative ways to add revenue to your existing business. Drop shipping allows business owners to provide products to their customer with very little overhead.

Drop shipping is the term used when a business or individual sells products to an end user through a third party. The third party, referred to as a Drop ship Wholesaler, warehouses the items, processes orders, packages, and ships the item directly to the end user. The drop shipper provides the retailer with tracking information.

It is important to educate yourself before implementing a drop ship program for your existing or startup business. There are many benefits to be experienced by offering a drop ship program. The most difficult task of starting a drop ship business is finding a reputable distribution source. A search on the internet will result in numerous companies offering drop ship service. Talking to others about their experience with different companies is the best way to find companies that will provide the products and services. A drop ship directory will provide you with valuable information regarding the shipping procedures, fees, processing time, and warranty information.

A legitimate drop shipper does not charge monthly fees. During your search, you will discover many companies offer products that are inferior and charge a monthly fee to the retailer. Drop shippers who are truly valid do not advertise as heavily as those who are not. Searching thoroughly will result in a perfect match. Many legitimate drop shippers charge a per order fee.

You must meet the requirements of these drop shippers to open an account. You may be required to submit copies of your business license, FIN, and Sales Tax number. Once you have completed the application process and have successfully opened an account with a drop ship wholesaler, you are ready to begin the process of opening your store.

Online retailers will need to decide how they will market their products. Online sources such as EBay are one way to start. Pay close attention to the fees charged by these retailers, in many cases, the fees charged by companies such as EBay, combined with the fees charged by your drop ship wholesaler can result in money lost. Consider using an online shopping cart that offers the service free. These companies allow users to implement their web space to list their products in a format that can reach thousands of buyers.

Once you a have chosen the venue,list your products. Your drop shipper's website will provide you with all the information you need to list your products. The drop shipper provides a picture of the item, a full description, and shipping information. You simply copy and paste the information into your shopping cart.

When listing your items the price is the most important part of your listing. Price your item too high and you will receive no sales. Price your item to low and you will lose money.

Example:
Widget Cost $7.00
Drop Shipper Fee $1.50
Payment Processing Fee 3%

A mark up of 20% to 25% is acceptable. This is not set in stone; you must use your own judgment. However, with a mark-up of 25%, you will list your widget at $8.75. Once your order is processed, you are accessed a fee of $1.50 and $7.00 which means you currently owe your drop shipper $8.50. Factor in your payment processing fee of 3% (.27 cents) you are now 2 cents in the red. Thus is is vitally important to consider all factors before pricing your item.

New retailers may consider services like Paypal or Google Checkout. These services allow buyers to pay for their items via their credit card and allow retailers to receive their money quickly.

Get your store in front of as many people as possible. Submit your site to as many search engines as you can find. Visit forums and link to your store. Add links to your store to your email signature. Be creative in finding ways to get your store noticed.