Drop shipping is a supply chain management technique in which the retailer does not keep goods in stock, but instead transfers customer orders and shipment details to either the manufacturer or a wholesaler, who then ships the goods directly to the customer.
As in retail businesses, the majority of retailers make their profit on the difference between the wholesale and retail price but some retailers earn an agreed percentage of the sales in commission, paid by the wholesaler to the retailer.
As in retail businesses, the majority of retailers make their profit on the difference between the wholesale and retail price but some retailers earn an agreed percentage of the sales in commission, paid by the wholesaler to the retailer.
Search For Best Drop Shipper
Finding a good drop-shipper
Thousands of Web companies are aching to help you set up your online business. While some of them are good solid companies with legitimate backgrounds, others are out there just trying to get your money. These guys hope you don't know what you're doing; they're betting you'll be desperate enough to send them some cash to help you get your share of the (har-har) "millions to be made online."
Consider the following when you're choosing drop-shippers to work with:
- Skepticism is Healthy. When you come across Web sites that proclaim that they can drop-ship thousands of different products for you, think twice. Thousands? How many stores carry "thousands" of items — if they do, they have vast square footage for storage and hundreds of thousands of dollars to invest in merchandise. Most drop-shipping services don't. A much smaller offering of merchandise may indicate that indeed the drop-shipper has the merchandise ready to ship and isn't relying on ordering it from someone for you.
- Look out for long lines of distribution. Drop-shippers are often middlemen who broker merchandise from several different sources — for example, from other middlemen who buy from brokers (who in turn buy from manufacturers). The line of distribution can get even longer — which means that a whole slew of people are making a profit from your item before you even buy it "wholesale." If even one other reseller gets the product directly from the distributor or (heaven forbid) the manufacturer, that competitor can easily beat your target selling price and make (what should have been) your profit. Verify with the drop-shipper that they stock the merchandise they sell.
