What About Drop Shipping?

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First of all, what is drop shipping. In drop shipping, the product distributor takes care of maintaining the inventory and handles the shipping for you. Rather than ordering products in bulk and trying to store it in your house or in a storage garage, you never see the products. All you have to do is find a way to sell them and then contact the drop shipper and they’ll pack it up and send it to the customer directly. Most even put your company label on the package so to the consumer it looks like it came from your company.

Drop shipping has been one of the more popular options for selling on eBay and on personal e-commerce sites. It does take a lot of the drudgery out of online selling. But, there are also some significant downsides to it as well.

Let’s look at the upside first:

If you have limited space in your home and don’t want to go to the extra expense of renting a storage garage or office space, drop shipping can eliminate this expense and aggravation. If you do all this storage and shipping work yourself, your house will quickly get overrun by shipping boxes and products. I’ve been there myself.

Another plus is that you save on shipping charges and packaging materials. Having a few boxes of products delivered by UPS or other carrier adds to your costs and if you order by the truckload, this cost can run into the hundreds of dollars. And, guess what, boxes and other packaging add to your cost too. Even if you buy these items wholesale, the cost does add up.

The last upside we’ll cover is that it allows you to concentrate your efforts on selling and not day-to-day operations. You can quickly get bogged down in details and ignore your sales efforts unless you’re well organized.

Now, let’s look at the downsides of drop shipping:

First of all, you’ll find that drop shipping drops your profit margin. The drop shipper has to pay a decent wage for their help (unlike you when you enlist your kids or spouse to help out). They have the overhead of the warehouse and other such costs. They pass these costs on to you and, in turn, you have to pass them on to your customers. This can make you non-competitive in many markets. Even worse, guess who’s responsible if when shipping or back order problems come up? Yes, that’s right, you are.

Finding a good drop shipper is tough as well. There are a lot of less than honest ones out there. Avoid those who want to charge you fees to join or have other restrictive or costly rules no matter how good a deal it appears to be on the surface. There are good ones out there but you have to look for them. I’ll let you in on a few I’ve worked with in later articles.

Lastly, you’ll find a lot of saturation of commonly drop shipped products. Do a search on eBay first and see how many eagle statuettes or cute kitten knickknacks people are selling. For drop shipping to work well for you, particularly as a newcomer, you have to find a niche market that has low competition and not sell what everybody and his uncle is selling.

Drop shipping can be profitable if done right. Stay clear of the common pitfalls and find your niche and you should be able to turn a small to mid-sized profit from this venture.

This entry was posted on Sunday, December 24th, 2017 at 8:43 pm and is filed under Drop Shipping, Online Auctions, Selling Online. You can follow any responses to this entry through the RSS 2.0 feed.

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