SolveYourProblem
Article Series:
Niche Marketing Opportunities
Can
You Profit With Drop Shipping?
by Jeff Cohen
Smart Internet marketing involves smarter
business strategies - and one such strategy is drop shipping.
With drop shipping, you can save your time and put it to better
use making you more money.
Drop shipping is an entrepreneur's dream, offering a host
of benefits. To put it simply, drop shipping allows
you to sell goods online at a price of your choice without
keeping
any inventory. When the customer purchases the goods and makes
payment for them, you will place an order for the product though
your supplier, a drop shipper. Your drop shipper then charges
you a wholesale price for the product and ships the product
directly to the customer. You get to keep the difference between
wholesale and retail price.
Drop
shipping offers many unique advantages to you:
- You
don't need to keep stock or inventory.
- You
don't need to bother with packing and shipping.
- You
can make money easily by just taking orders.
- Your
profit margin could increase.
Even though drop shipping can have many advantages, however,
there are some things you need to consider:
- Any
product or service you intend to sell online must be in
demand.
- The
product you choose must sell in high volumes: the fact that
you could sell the profit cheaply and make a good margin
doesn't mean anyone is buying. Research the market for any
product line you're considering. Try to determine demand for
the product, how much competition there is, and what they're
charging.
- Signing
up with a well-known supplier offers you many benefits. For
instance, you will probably find it easier to return unsatisfactory
products. Some drop suppliers will even pay the return costs
in these cases. As a promotion, some suppliers will even offer
you products for free if you meet their targets.
- Target
one or two products at a time -- don't be in a rush to sell
lots of different ones. Maintaining a large drop shipping
business is often difficult and can become unmanageable.
How
do you set your drop shipping business? To get started,
find a directory of legitimate drop shippers with excellent
reputations. Make a list of drop shippers who are established
in the business and have a proven track record. Next, take
the top five from the list and look through their website for
products and services. In most cases you will find that their
catalogue is massive, with all sorts of things available. Above
all else, you need to be sure that you can sell what you choose.
Once you've done your homework, make contact with the drop
shipper, either by phone or by mail. Don't start prematurely
telling them all about your project, though -- you should start
by asking for additional information on the terms and conditions.
You will have read every clause and sub-clause thoroughly,
taking care to understand the business model you're signing
up to. Terms and conditions and service policies often vary
with different drop shippers -- look out for any hidden clauses
that could cause you trouble in the future.
The next step is to select
the best offers from the drop shippers and start negotiating for better commission rates. If you have
a thriving web business with a lot of traffic, it's possible
to make a case for a better commission rate. Once the terms
and conditions are acceptable to both of you, you can add the
products to your online store.
When
you work with a drop shipper, you become a "merchant" or "trader". This usually means that you will need to register with the
relevant authorities. To become a merchant you may have to
register to file tax returns and get a valid license to sell
your products. Such regulations vary from region to region,
so you should check it out with your local authorities.
The
biggest headache associated with drop shipping is product
returns. Don't expect it to be anything like smooth sailing.
You'll run into back orders, product returns or even refund
demands, if products are defective. As the shipping isn't under
your control, it's difficult to explain your customers what's
going on when products are unavailable or delivered late. Your
own terms and conditions, user policy and other such notices
must be precise and explain everything in detail to the customers.
Always aim to avoid legal hassles, but do be prepared to contest
customers' claims.
# # # # # SolveYourProblem.com : 2007
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