Dropshipping – What is it?
Dropshipping allows small internet business owners / Ebay or Amazon traders who do not have the capacity to stock products in a warehouse to sell goods. You advertise and sell the goods the dropshippers have without having to handle any stock. The fact that you do not have to outlay any money until you have a guaranteed sale is a big advantage of dropshipping but the internet is fraught with danger with many drop shipping sites exploiting the naivety of inexperienced sellers. I do not want my readers to fall in to some of the traps that friends of mine have so I will give some key advice on drop shipping. The majority of online drop shippers are actually the middle men who are making a profit from you and adding a healthy mark up. They hold the stock, you advertise it and charge the buyer whatever you like. The buyer pays you and then all you have do to is pay the dropshipper and they send the stock to the buyer.
Type dropshipping in Google and you will not know where to start. The dodgy companies charge a fortune to join their sites and do not disclose any prices until they have your money. CON! Type in drop shipping in Ebay and there are people selling lists of drop shippers. Do not buy these lists! I will give you the information you need for free. You can make drop shipping work for you. The good news is that you do not need to invest much money and you can do it from home. Drop shipping is not a get rich quick scheme but if you are smart (and I will teach you the basics) you can make it work. Dropshipping allows small internet business owners / Ebay or Amazon traders who do not have the capacity to stock products in a warehouse to sell goods. You advertise and sell the goods the dropshippers have without having to handle any stock. The fact that you do not have to outlay any money until you have a guaranteed sale is a big advantage of drop shipping but the internet is fraught with danger with many drop shipping sites exploiting the naivety of inexperienced sellers. I do not want my readers to fall in to some of the traps that friends of mine have so I will give some key advice on drop shipping.
A working example – The con sites usually charge you a membership to join the site, perhaps £125 – £150 per year. You will view the wares and see the recommended retail prices (RRPS.) The sites will say something like this –
Item X is worth £50.00 RRP plus £5 P&P.
You can buy it for £38.00 plus £5 P&P and 50p admin fee.
Your profit is £11.50.
As the seller you will probably have your Amazon or Ebay fees to factor in but as you can see, drop shipping appears on the face of it to be quite an attractive prospect. But before you get sucked in, what you need to realise is that many people are doing exactly the same thing! So sellers are drawn into undercutting wars and the price drops as the market is swamped. Do you remember I told you that the Dropshippers are the middle men? You may also find that your item is for sale cheaper than the price you can buy it from the Dropshipper. You might as well just throw your membership money down the drain because with these types of sites it is very hard to make a profit, let alone a living.
Can dropshipping work? Yes do not despair yet. Dropshipping can be a real way to make a little bit of money on the side, you just need to side step the rip off merchants. A lot of drop shippers are selling tat from China; stuff that you can buy in pound shops, straight to DVD films or electrical goods with a very slim profit margin. Ebay is swamped with these. What you need to do is specialise. Many wholesalers of specific product ranges are cottoning on to drop shipping as way to increase their profits. It is these companies that you need to tap into. I am not adverse to paying a small membership fee (I pay membership to Cosco wholesalers for example) but do not part with a lot of money. At the end of the day, they should be relying on money from people selling their items not just paying the membership fee. Genuine sites may ask you to apply for membership rather than just generically grant it. Genuine sites should provide you with some example prices before you have to part with your cash; however this may be something you have to specifically ask for. Don’t be afraid to contact small companies who do not offer drop shipping in their terms and conditions and suggest an arrangement, they may want to do a deal with you.
What to sell
If you want to drop ship, think about what you would like to buy. If it is coming up towards Christmas time, think about secret Santa and stocking fillers. If it is Easter/Mothers day etc, tap into these markets. Vitamins, supplements and protein powder always sell well. Regarding protein, there are sites that make unbranded products so you can name it and market it yourself. Children’s things also sell well, clothes, games and toys such as Lego. I know people who are successfully dropshipping Playstation / Xbox accessories. Whatever you choose to sell though, you need to market it well! I recommend reading my Selling on Ebay page as this includes a lot of helpful information and personal insight. I can sell anything on eBay; it is all about the words you use!
- Ask for a trial
- Read the terms and conditions
- View products and check prices on Ebay
- Order something to yourself – how is it packaged? What is the quality?
- Market your items well – good pictures, punchy titles, grab your customers
- Keep a record of what you sell, how much for and your profit margin
- Think about tax!
The do nots
- Do not blindly pay membership fees
- Do not pay for lists of drop shippers – often these are out of date or inaccurate.
- Do not expect to make tonnes of money quickly