Starting a Drop Shipping Business: Tips and Tricks
Table of Contents
- Introduction
- What is Drop Shipping?
- Benefits of Drop Shipping
- Finding Drop Shipping Wholesalers
- Using Google to Find Wholesalers
- Challenges and Downsides of Drop Shipping
- Overcoming Challenges in Drop Shipping
- Is Drop Shipping the Path to Overnight E-commerce Success?
- Conclusion
- FAQ
What is Drop Shipping?
Drop shipping is a retail method in which the seller does not keep products in stock. Instead, the seller partners with a wholesale supplier that stocks its own inventory. When a customer places an order, the seller transfers the order and shipment details to the supplier, who then ships the goods directly to the customer. The biggest benefit of drop shipping is that the seller does not have to worry about fulfillment or inventory issues.
Benefits of Drop Shipping
One of the biggest benefits of drop shipping is that it makes it easy to get started selling online. The seller does not need to invest heavily in inventory, yet can still offer thousands of items to customers. Drop shipping is also incredibly convenient and frees up time to concentrate on marketing, customer service, and operations. With all the physical fulfillment issues handled, the seller is free to operate the business anywhere with an internet connection. Additionally, drop shipping is a trusted model used by many online stores and major retailers to offer a wider selection of products to their customers without having to deal with increased inventory hassles.
Finding Drop Shipping Wholesalers
To find drop shipping wholesalers, the seller can start by contacting the original manufacturer of the products they want to sell. Not all distributors will be willing to drop ship, but it will give the seller a list to follow up with. The seller can also invest in a directory, such as the paid directory World Wide Brands, as a reputable source of drop shipping wholesalers. Additionally, if the seller is using Shopify, they can access a variety of apps in the app store that will connect them directly with reputable drop shippers.
Using Google to Find Wholesalers
Google can also be an effective tool for finding drop shippers, but the seller needs to keep a few things in mind. Wholesalers and drop shippers are notoriously bad at SEO and marketing, and usually aren't going to pop up on the first page of Google for a term like “handbag wholesaler.” Instead, the seller will need to dig deep into the search results, often going through 10 or 20 pages of listings. Additionally, the seller should use lots of modifiers, including “distributor,” “reseller,” “bulk,” “warehouse,” and “supplier.”
Challenges and Downsides of Drop Shipping
One of the biggest challenges of drop shipping is the loads of competition and weaker margins. Products that can be drop shipped will spawn a lot of competition, usually leading to cutthroat pricing and diminishing profit margins, making it hard to build a viable business. Additionally, syncing inventory is difficult and leads to out-of-stock items. Involving a third party will result in more fulfillment errors, mistakes, and logistical problems. Even the best drop shippers make occasional mistakes, and mediocre ones make a lot of them.
Overcoming Challenges in Drop Shipping
To overcome the challenges in drop shipping, the seller typically can't compete on price. Instead, they'll need to offer value in a different way, usually through top-notch product education, service, or selection. The best way to mitigate the problem of syncing inventory is to work with multiple suppliers with overlapping product lines. It's inherently dangerous to rely on a single supplier. Having two suppliers doubles the likelihood that an item will be in stock and available for shipment. When a customer is sold an out-of-stock item, the seller can offer the customer an upgraded product or discount to build a loyal brand advocate.
Is Drop Shipping the Path to Overnight E-commerce Success?
Of course not. As with any successful online store, the seller will need to invest over time in a quality website, marketing, and customer service. But drop shipping does provide an easy way to get started and the ability to leverage other people's capital without having to invest thousands of your own. When managed correctly, it can form the foundation of your own successful online store.
Conclusion
Drop shipping is a retail method that allows the seller to partner with a wholesale supplier that stocks its own inventory. The biggest benefit of drop shipping is that the seller does not have to worry about fulfillment or inventory issues. Drop shipping is a trusted model used by many online stores and major retailers to offer a wider selection of products to their customers without having to deal with increased inventory hassles. While drop shipping has its challenges and downsides, it can form the foundation of a successful online store when managed correctly.
FAQ
Q: What is drop shipping?
A: Drop shipping is a retail method in which the seller does not keep products in stock. Instead, the seller partners with a wholesale supplier that stocks its own inventory. When a customer places an order, the seller transfers the order and shipment details to the supplier, who then ships the goods directly to the customer.
Q: What are the benefits of drop shipping?
A: The biggest benefit of drop shipping is that the seller does not have to worry about fulfillment or inventory issues. Drop shipping also makes it easy to get started selling online, is incredibly convenient, and frees up time to concentrate on marketing, customer service, and operations. With all the physical fulfillment issues handled, the seller is free to operate the business anywhere with an internet connection.
Q: How do I find drop shipping wholesalers?
A: To find drop shipping wholesalers, the seller can start by contacting the original manufacturer of the products they want to sell. Not all distributors will be willing to drop ship, but it will give the seller a list to follow up with. The seller can also invest in a directory, such as the paid directory World Wide Brands, as a reputable source of drop shipping wholesalers. Additionally, if the seller is using Shopify, they can access a variety of apps in the app store that will connect them directly with reputable drop shippers.
Q: What are the challenges and downsides of drop shipping?
A: One of the biggest challenges of drop shipping is the loads of competition and weaker margins. Products that can be drop shipped will spawn a lot of competition, usually leading to cutthroat pricing and diminishing profit margins, making it hard to build a viable business. Additionally, syncing inventory is difficult and leads to out-of-stock items. Involving a third party will result in more fulfillment errors, mistakes, and logistical problems. Even the best drop shippers make occasional mistakes, and mediocre ones make a lot of them.
Q: Is drop shipping the path to overnight e-commerce success?
A: Of course not. As with any successful online store, the seller will need to invest over time in a quality website, marketing, and customer service. But drop shipping does provide an easy way to get started and the ability to leverage other people's capital without having to invest thousands of your own. When managed correctly, it can form the foundation of your own successful online store.
