When operating as a drop shipper, you don’t actually purchase stock before you start selling any stock. This means that drop shipping is among startup business ideas where you don’t have to risk spending a lot of money purchasing products that might not sell. What you do as a business, is offer the products via your website or catalog, and when an order comes through, you process the payment and send off the shipping details to your supplier.
Customer service is difficult to handle — be ready for back and forth phone calls, as you will probably not have answers for your customer.
Knowledge of the product — You may have never even seen the products with your own eyes. Try to avoid this situation by visiting the supplier or getting some discounted products (samples) to gain some knowledge about them.
Competition — If they drop ship for you, they may be doing it for others. Again, research is the key here. Check out your competitors and compare prices to ensure you can make enough money for business to be profitable.
Ensuring Success
As with any business however, there are aspects that you’re going to have to get right in order to succeed.
Process Checklist
The supplier will make sure that all shipping labels with your branding, (which can often be sent via e-mail) will be attached to the packaging, or alternatively will ensure that the branding on the package does not indicate that the item is being supplied directly by the manufacturer or from a wholesaler.
The price you pay the supplier will be slightly higher than had you bought the stock up front (as in the traditional method), this extra markup reflects the cost of order fulfillment (the packaging and warehousing) that your supplier is doing on your behalf.
Positives of drop shipping
1. It’s obvious to see that there are many advantages to becoming a drop shipper; such as not needing to purchase large amounts of stock, which means you don’t need to have a warehouse where you need to hold all that stock, and therefore not have to deal with any unsold products. You also won’t need a large staff to deal with the picking and packing of your orders.
2. The other main advantage you have is your ability to quickly select new products for your catalog, at very little upfront cost, which means you can respond to new trends quickly.
Negatives of drop shipping
Negatives of drop shipping
Customer service is difficult to handle — be ready for back and forth phone calls, as you will probably not have answers for your customer.
Knowledge of the product — You may have never even seen the products with your own eyes. Try to avoid this situation by visiting the supplier or getting some discounted products (samples) to gain some knowledge about them.
Competition — If they drop ship for you, they may be doing it for others. Again, research is the key here. Check out your competitors and compare prices to ensure you can make enough money for business to be profitable.
Ensuring Success
As with any business however, there are aspects that you’re going to have to get right in order to succeed.
Process Checklist
The following 3 steps need to be reviewed in depth, to ensure that your business is not affected negatively, should something go wrong. All three are critical and failure to get any one of these right will result in your customers going elsewhere.
Supply Side Customer Service: Make sure that there is a customer service process in place between you and the supplier. This is usually outlined in their terms and conditions, however you can always ask for clarification on any point you’re still not certain about.
Stock Control: Arrange to have a stock feed set up between your supplier and your e-commerce system, so that stock availability is then accurately reflected on your site, with an ‘out of stock’ sign coming up on any products that aren’t available. The Information Technology (IT) teams of most suppliers should be able to arrange this, although there could be a charge for setting this up.
Customer Service: As good as a supplier may be, there will always be occasions when things don’t go according to plan, and for these instances, you will need a robust customer service team and a returns policy that your customers can feel confident about.
Finding A Supplier
The Internet is not always a reliable place to try and source your products, and often the supplier you’re looking for won’t necessarily be using the Internet as their primary marketing channel. You are likely to come across many middlemen who will offer to supply you, and even drop ship products for you, though their markup could be at a level where you’d be struggling to make any money. Always do a thorough background check on any company you decide to use.
Recommended Sites
Doba Drop shipping: This site is a real favorite of mine, they have some fantastic branded stock and the prices are really good, they have a free trial so don’t take my word for it, see for yourself.
Worldwide Brands: These guys are big, they have an incredible site and the thing is you can trust suppliers as they have been checked out as well as everything they have is quality.
Wholesale Pages: This is another directory but it is less expensive than the rest and in all likelihood gets you the best value, it is not a polished kind of site like other global brands and you don’t get all the resources, but the suppliers are secure, reliable and you can use them to get your business going.
Taking the plunge
Setting up an account: Some suppliers may require you to sign an actual agreement on paper, detailing the type of products that they’ve agreed to sell to you and the terms and conditions of any sales.
Establishing the payment method: You will need to set up a way to pay your supplier and chances are you’ll have to accept the methods that they offer (if you’re unhappy with the payment method, you will have to look for another supplier).
Taking payments: Providing a customer with several methods of making secure payments is preferable to simply having a PayPal option. There will be many customers who will not have a PayPal account or would prefer to pay by credit/debit card directly. (There are other online payment options available, such as Google Checkout and Checkout by Amazon).
Delivery
The delivery company that is used won’t be selected by you, as delivery is going to be handled by your supplier, they are the ones who will be handling the delivery of the goods.
To help in resolving any issues that arise, make sure that as part of your agreement with your supplier, you’re can receive adequate tracking information in order to advise your customers exactly where an order is at any one point in time.
While the idea of drop shipping may at first seem very attractive, you should not regard it as an easy option. This is among startup business ideas where you still need to do a lot of the work that a traditional business also does, especially if it is going to be your sole source of income.
Supply Side Customer Service: Make sure that there is a customer service process in place between you and the supplier. This is usually outlined in their terms and conditions, however you can always ask for clarification on any point you’re still not certain about.
Stock Control: Arrange to have a stock feed set up between your supplier and your e-commerce system, so that stock availability is then accurately reflected on your site, with an ‘out of stock’ sign coming up on any products that aren’t available. The Information Technology (IT) teams of most suppliers should be able to arrange this, although there could be a charge for setting this up.
Customer Service: As good as a supplier may be, there will always be occasions when things don’t go according to plan, and for these instances, you will need a robust customer service team and a returns policy that your customers can feel confident about.
Finding A Supplier
The Internet is not always a reliable place to try and source your products, and often the supplier you’re looking for won’t necessarily be using the Internet as their primary marketing channel. You are likely to come across many middlemen who will offer to supply you, and even drop ship products for you, though their markup could be at a level where you’d be struggling to make any money. Always do a thorough background check on any company you decide to use.
Recommended Sites
Doba Drop shipping: This site is a real favorite of mine, they have some fantastic branded stock and the prices are really good, they have a free trial so don’t take my word for it, see for yourself.
Worldwide Brands: These guys are big, they have an incredible site and the thing is you can trust suppliers as they have been checked out as well as everything they have is quality.
Wholesale Pages: This is another directory but it is less expensive than the rest and in all likelihood gets you the best value, it is not a polished kind of site like other global brands and you don’t get all the resources, but the suppliers are secure, reliable and you can use them to get your business going.
Taking the plunge
Setting up an account: Some suppliers may require you to sign an actual agreement on paper, detailing the type of products that they’ve agreed to sell to you and the terms and conditions of any sales.
Establishing the payment method: You will need to set up a way to pay your supplier and chances are you’ll have to accept the methods that they offer (if you’re unhappy with the payment method, you will have to look for another supplier).
Taking payments: Providing a customer with several methods of making secure payments is preferable to simply having a PayPal option. There will be many customers who will not have a PayPal account or would prefer to pay by credit/debit card directly. (There are other online payment options available, such as Google Checkout and Checkout by Amazon).
Delivery
The delivery company that is used won’t be selected by you, as delivery is going to be handled by your supplier, they are the ones who will be handling the delivery of the goods.
To help in resolving any issues that arise, make sure that as part of your agreement with your supplier, you’re can receive adequate tracking information in order to advise your customers exactly where an order is at any one point in time.
While the idea of drop shipping may at first seem very attractive, you should not regard it as an easy option. This is among startup business ideas where you still need to do a lot of the work that a traditional business also does, especially if it is going to be your sole source of income.
No comments:
Post a Comment