Building an Income from Dropshipping
Posted on : 01-06-2007 | By : Lyndon | In : Work From Home Articles
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In the past, setting up a business could be an expensive affair, with many up front costs incurred before you could really start to earn any money. Amongst the most expensive aspects of a business were the premises from which you would operate, and the initial purchase of stock to sell.
Thanks to the internet, it has become possible for almost anyone to set up a website that can act instead of a traditional shop, and use a mechanism called drop shipping to bypass the need to actually purchase any stock.
Drop shipping is a simple process by which a retailer takes orders for a particular product, for example a computer memory card, and then rather buy the item and then sell it on at a profit, simply passes on the name and address of the buyer to the wholesaler, who when sends out the item to the customer direct. The retailer keeps the profit he has made from the margin between the price he advertises the item at, and the lower wholesale cost including delivery that the supplier charges.
The main advantage of building your income from drop shipping is that it is one of the most risk free methods of earning money buying and selling. As the retailer, you do not incur any costs until you actually place an order, and even then, as long as you set a retail price that covers any costs that you can foresee, you are guaranteed to make a profit.
The online auction site eBay is a great place to earn money from selling goods online, and is a medium that lends itself perfectly to the drop shipping of goods. As the seller, all you need to do is advertise goods from a wholesaler at a “buy it now†price that is lower than you might see in a high street store or conventional website, and then wait for customers to order from you thanks to your low prices!
Once you have received an order and payment, simply forward the appropriate details onto the wholesaler, and they will send out the product to the buyer. Many wholesalers are happy to enter into a drop shipping arrangement with retailers, as it means that they are able to avoid any promotional costs, and only supply on an on demand basis, reducing their costs substantially, while you as the retailer are able to pocket a decent no-risk profit on every single item that you sell.
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For drop shipping to work you need to find real wholesale drop ship product suppliers. I found them with the free account at Inventory Source http://inventorysource.com/ I was able to get free access to view the real product sources. When I wanted to grow my ecatalog they have services to load the products to my websites and update them everyday…as well as my ebay, Amazon, and Shopzilla listings.
Another source for products is Shopster.com. They have a complete store builder you can customize, unique urls and hosting as well. You can sell products throuh ebay listing using their ebay listing manager if you prefer and all their supplier dropship directly to your customer.
Shopster Dropshipping – http://www.shopster.com/whatIsDropshipping.html
Shopster Wholesale Products – http://www.shopster.com/app/warehouse/
I found my wholesalers by searching for my nich and the word dropshipping or drop shipping. Example: dog bed drop shipping. It takes some looking but it’s free.
We have found a great dropshipper that does not charge a fee and has no minimum order requirements. They also have a customer rewards program that gives you discounts on future orders.
We use them in our store front and have had great success. Their products are priced so low that we can use a good mark up and still sell for less than retail. In fact they have no requirements at all, they don’t charge tax and you don’t even need a business license.
You can read their information on dropshipping if you have not dropshipped before. They walk you through the advantages of it. We have used other dropshippers but clearly you cant beat Dropship Shopz rewards program which none of the others do.
They ship our customers orders very quickly and have great customer service. They are the best all around dropshipper we have found. A lot of dropshippers these days try to gouge you on prices, they take and never give back and you can’t make much off there products unless you charge your customers retail or above.
For our money and time we are sticking with this dropshipper for some time to come. They have treated us right and enabled us to make a lot of money. If you have been around it a while you will know what I am talking about.
If you have not been around our advise is don’t waste all the time and energy we did when we first started. It’s always good when you can read about what others have gone through and save your self some work.
Now that gas is at an all time high you will find your customers are shopping on the internet more. (But) they will be looking for cheaper prices from you because they can’t afford to drive their gas hog to work and back. Much less all over town looking for an item they want and can’t find because its more than likely on the internet.
The funny thing is that if you look in the retail stores at an item and then look on the internet you will be shocked by the price deference. In general you can buy it for about half the cost in the store and not pay any taxes.
It is true that you have to pay shipping but, add it up you will still no be paying as much. Lets look at an example: Cost of item at store $100, Tax on item say 9% well thats $9 so now you have payed $109. Thats not including the cost of the gas to get to and from the store.
Now lets look at ordering the same item from a internet store: Cost on e-store $50, No Tax, Shipping say $13 on a 4lb. item. Ok lets ad that up: $63 total. Now whats our savings $109 – $63 = $46. If you take in to consideration the cost of gas to the store and back. You could have bought 2 or the items on the internet.
The latest trends show more people shopping the internet. This is a good thing for you if your into dropshipping on your e-store. Lets see what we would have made on that item. Say we got it from the dropshipper for $30, we would have made $20. Now I know that does not sound like much but we don’t expect to make a bunch off one sale.
Even if we had payed more for the item and made less, its all good. That is a part of normal business. If your interested in an online e-shop dropship business, we will give the link one more time at the bottom of this page for our best dropshipper.
Remember the pros of dropshipping are: Not having thousands of dollars in stock on your shelves, Not having to handle and box up the item, Not having to get it to UPS or what ever carrier. Not having to put out a bunch of money up front.
In fact you have no investment at all except the cost of website. That cost is only about $100 or so a year. Now I am not saying its a bed or roses, You will have to do a lot of copy and paste of products to your e-store. What I am saying is that the end justifies the means.
Once your up and running you will be processing orders. Another advantage over a retail store is that you are not just open from say 10am to 10pm.
Your store is open for your customers 24/7 and you don’t have to just sit there wasting your time waiting on the next customer to come in.
In fact there are many other advantages: You will not be robed at gun point, You will not have customers in your store stealing you items, You will not have to pay employees, You can come and go as you please, and there are many more if you think about it.
Ok enough said, you can read more about it at the dropshipper and make your own decisions, We just wanted to try to give you some insite to the world of e-shops. We wish you the best of luck with your store and here is the dropshipper link: Dropship Shopz http://www.shopzplus.net/DropshipShopz/
Thanks for this post, Lyndon. I have been thinking about doing a drop-ship business. The information about eBay is really good to know! It is encouraging to learn that you don’t need a large upfront capital investment.
thanks so much,
Debby Taylor
i do a drop-shipping review on my website, if you find a good drop-shipper you can make a lot of money on websites such as Ebay, and the smaller ones.
think niche low competition that caters to a specific market. That’s how you can make a nice 2nd income from home using the powers of dropshipping.
Great blog, useful tips!