Online Drop Shipping - All You Need to Know

Online Drop Shipping - All You Need to Know

What Is Online Drop Shipping?

Online Drop Shipping may the most efficient and lowest cost model available for you to begin selling hard goods from an Internet retail store.

Drop Shipping occurs when a retailer accepts customer orders for products that the retailer does not carry in inventory. This retailer forwards the customer's order to either a manufacturer or a drop shipping wholesaler that keeps an inventory of the product(s) in question. This manufacturer or wholesaler now ships the product(s) directly to the customer (order fulfillment) and bills the retailer at the wholesale price. The retailer who originally took the order has already billed the customer at the retail price and records the difference as gross profit.

Advantages Of Online Drop Shipping

The obvious immediate benefit of Online Drop Shipping is the retail business owner can start and operate a potentially strong, profitable enterprise without the financial burden of buying and storing inventories of hard goods. Additionally, the online drop shipping retailer does not have to ship products to customers and therefore does not have to maintain a shipping department.

Online Drop Shipping Logistics

Without the need for physical storage and shipping facilities, your online retail store business can be operated from just about anywhere including a home office corner desk. Aside from home office furniture, the only capital equipment required is your computer and printer. Every aspect of the business from building your website to dealing with suppliers and interacting with customers will be accomplished via computer. Again, you can run your business from your home based office or from a tropical beach if you're on vacation.

Getting Started In Online Drop Shipping

There are three key elements to address as you create your e-business plan in preparation to earn extra money drop shipping.

Decide what types of products you want to sell

Sourcing these products, which means locating reliable vendors for the items that you want to sell

Building not only a website but building a successful e-commerce business!

What Products To Sell?

There are a couple of roads here for you to choose between. One option is to offer products in highly popular categories such as electronics, health & beauty, clothes, jewelry, etc. The obvious popularity of products in these areas means that you are participating in large markets with high demand for the products you will offer. This sounds like a desirable situation, however, it also means that the competition is intense. Again, your marketplace is gigantic and if you become a very savvy online marketer, you can do extremely well in your online business. Conversely, if you are not at or near the top of your game, you could get lost among the thousands of sites in your market.

One alternative sourcing strategy would be to offer more esoteric or "niche" products that don't have the pervasive demand, nor the fierce competition. These smaller markets may be easier for you to command and attain a high-ranking position. Additionally, smaller markets would be less price competitive and allow higher profit margins.

Consider beginning this decision-making process by turning inward and examining your own personal areas of interest or perhaps hobbies that are associated with saleable items sought by others. Your personal familiarity with a subject might make your e-business even more enjoyable.

Product Sourcing

This is one of the mission critical activities in establishing your drop shipping internet business.

Sourcing is mission critical because the choices that you make can either reward you with a smooth running profitable e-business or turn it into a customer service and/or financial nightmare.

Broadly speaking, there are lots of sources for items to be sold at retail. Saleable products are manufactured, crafted and grown. High volume items are manufactured in industrial settings in large quantities. At the other end of the spectrum, small volume items such as high quality artistic products are produced in smaller numbers and in some cases may be handmade one at a time. Organic items and food products may be grown and are sold fresh or in a preserved form.

Wholesale Drop Shipping Companies

If your e-business plan is to open an Internet retail store offering a broad line of product categories and products, Wholesale Drop Shipping Companies are likely to be your best initial sourcing option.

A Wholesale Drop Shipping Company is a "factory authorized" wholesale distributor that buys products in very large quantities directly from manufacturers. This distributor offers the service of drop shipping products in quantities as small as a single item directly to retail customers on behalf of a retail merchant. The drop shipped product(s) are billed to the merchant at true wholesale prices.

The critical nature of sourcing among wholesale drop shippers stems from the difficulty in determining which ones are honest and reliable. Internet search is the method most often used to locate these companies. Unfortunately, many of the companies that are returned from the search are not what the claim to be. Instead of being factory authorized wholesale drop shippers, they are merely middlemen who accept orders from retailers, add their own mark-up and bill the retailer at higher than wholesale price. This middleman will then place your order with a legitimate wholesaler and pocket the difference. It is also important for a wholesale drop shipper to be reliable. You, as the retailer, will suffer customer complaints if the drop shipper is out of stock or simply lax in shipping your orders.

One company, Worldwide Brands, Inc. has since 1999, been researching, locating and certifying real Factory Authorized Wholesalers who are willing to work with online retailers.

Worldwide Brands is not a wholesale drop shipper or a middleman. They are what is called an Aggregator and they do the vetting that you could never perform on your own. Worldwide Brands charges a one time fee for lifetime access to their "Product Sourcing Tool" which contains 8,000 Certified Drop Shippers and over 8 million genuine wholesale products. In addition, this company provides free educational information valuable to anyone planning to open an online retail drop shipping store.

Building a successful e-commerce business

One excellent e-commerce marketing strategy is to create Internet Retail Stores that serve niche markets. Build your website around a particular theme and sell items that are associated with that theme. This is a strategy that can greatly enhance your probability of success in online drop shipping by including the overall theme of your site in your marketing rather than only focusing on your items for sale. Your website becomes your product! An e-commerce business constructed in this way will stand-out among the behemoths like Amazon, Walmart and others.

In the end, it will be your decision to pursue an e-commerce business opportunity. Remember, whether your website is a store selling hard goods or some other kind of online enterprise, it is not just a website. First and foremost, it is a Business and should be constructed to address fundamental reality of the way people use the Web.