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What is Drop Shipping and How to get Started?

What is Drop Shipping and How to get Started?

Feb 3, 2014

What is Drop Shipping?

 

So what is Drop Shipping you ask? Drop Shipping is a retail fulfillment method where an online store does not keep the products it sells in stock.

Therefore, when a store sells a product, it then goes and purchases the item from a third party Company and arranges it to be shipped directly to the customer. As a result, the merchant never sees or handles the product with the advantage of saving on upfront costs and storing inventory.

 

what is drop shipping

 

So this is the biggest difference between Drop Shipping and the standard retail model where you have to have the cashflow up front to purchase the products at wholesale then mark up to retail.

 

what is drop shipping

 

 

This unique model however can have a number of pros and cons:

 

Pro’s of a Drop Shipping Business

 

LESS CAPITAL TO INVEST – This is most probably the biggest advantage to starting your own Drop Shipping Business.  Virtually anyone can launch an ecommerce store without having to invest thousands of dollars in inventory up front. Traditionally, retailers have had to tie up huge amounts of capital purchasing inventory then turn over the stock before it dates.

Using the Drop Shipping model combined with DS Domination, you won’t have to purchase the product until your have presold the item. The customer will then pay you, then you can go and buy the item from the Supplier using those funds. Without major up-front inventory investments, it’s possible to start a successful Drop Shipping business with a very low budget making this an exciting work from home opportunity.

EASY TO START– Running an ecommerce business is much easier when you don’t have to deal with the physical products. With your own Drop Shipping Business you won’t have too:

  • Manage or pay for a warehouse space or storage
  • Pack and ship your orders, saving you on handling time
  • Track inventory for accounting reasons
  • Handling returns and inbound shipments, although will need to provide great customer service
  • Constantly ordering products and managing stock levels

LOW OVERHEADS – Because you don’t have to deal with purchasing inventory or managing a warehouse, your overhead expenses are quite low and you also won’t have to worry about having to many employees. In fact, many successful dropshipping businesses are run from a home office with a laptop for less than $100 per month. As you grow, these expenses will likely increase but will still be low compared to those of traditional brick-and-mortar businesses.

FLEXIBLE LOCATION – A dropshipping business can be run from just about anywhere with an internet connection. As long as you can communicate with suppliers and customers easily, you can run and manage your business. Your main resources will be a computer, internet connection and telephone.

HUGE SELECTION OF PRODUCTS – With a massive online market to draw from the inventory of products to choose from is massive. Amazon alone has something like 29 million listings!! They list anything from Electronics, toys, cosmetics, homeware, healthcare, DVD’s etc

EASY BUSINESS TO SCALE – With a traditional business, if you receive three times as much business you’ll usually need to do three times as much work.  By leveraging dropshipping suppliers, most of the work to process additional orders will be borne by the suppliers, allowing you to expand with fewer growing pains and less incremental work.  Sales growth will always bring additional work – especially related to customer service – but business that utilize Drop Shipping scale particularly well relative to traditional ecommerce businesses.

All these benefits make Drop Shipping a very attractive model to both beginning and established merchants. Unfortunately, like all models Drop Shipping does come with some disadvantages otherwise it would just be too easy!

 

what is drop shipping

Con’s of a Drop Shipping Business

 

LOW PROFIT MARGINS – Low profit margins is the biggest CON to operating in a highly competitive Drop Dhipping Market. It is so easy to get started and the costs are so low that many merchants will set up an online shop or ebay store and sell at low profits in an attempt to get the business going. The upside though is you can build the business up to scale out and start to sell higher ticket items producing a larger profit margin.

You just need to make sure that you select a niche that is well suiting to the Drop Shipping Business Model, provide GREAT customer service and set yourself up a professional looking website if you are promoting your products that way.

INVENTORY ISSUES – With a traditional retail model you will stock and keep track of your own Inventory and is much easier to keep track of what products have been sold. But when you’re sourcing from multiple warehouses, which are also fulfilling orders for other merchants, inventory changes on a daily basis. This will require more work and a great system to sync your store’s inventory to that of the Supplier which doesn’t always work perfectly.

SHIPPING COMPLICATIONS – Most Drop Shippers work with multiple suppliers and the products on your website will be sourced through a number of different drop shippers. This can complicate your shipping costs especially if delivered across different States within the US.

For example if a customer brought several items in one order, and all those items were coming from different suppliers, you would have several shipping charges. There isn’t always an easy way to calculate these charges plus more than likely unfair to pass on to the customer.

SUPPLIER ERRORS – Being the Merchant that sold the product to the customer you will have to assume responsibility in many cases for Supplier errors.

Many Suppliers can make mistakes and unfortunately YOU will be the one coping with the backlash. You will have the possibility of missing items, bad shipments and low-quality packing, which can harm your business’s reputation or effect your credibility or feedback ratings if you are selling through eBay.

 

what is drop shipping

 

But, don’t Despair

 

So, what is Drop Shipping and is it worth it?

Ok, well Drop Shipping isn’t a completely PERFECT type of Business Model, but realistically if you had a big cashflow and readily funds available you may decide to go the traditional route and import your own goods.

BUT

For many people, the average person wanted to build a business from home and start on a low budget, Drop Shipping is an awesome model and you can build a very rewarding business. Most of the little complexities that crop up in your business along the way can be addressed and solved.

The answer is YES, you can definitely build a successful, profitable and rewarding online Drop Shipping Business.

 

How to Start your OWN Drop Shipping Business the RIGHT WAY

 

Certainly you can study Drop Shipping and learn as you go, but if you really want to get off to a successful start why not learn from the Master’s mistakes?

Shorten your learning curve and learn from the people that have already made mistakes and grown successful Drop Shipping Business’s for over 10 years.

Purchase this extensive ‘teach you everything’ course through DS Domination.

Not only will you be instructed on how to get your Business off to the most successful start, but also have your own personal mentor, be part of an amazing and helpful fast growing team.

You will not only get access to very extensive step by step training videos showing you EXACTLY what to do but as a BONUS private access to our Team Marketing System with additional training, private facebook group, capture pages, banners, advertising material, webinars, hangouts and more

By starting your Drop Shipping Business through DS Domination, you can be assured you will not only be building your business alone, but along with the advice of the Drop Shipping Guru’s.

 

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what is drop shipping

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Lisa Walker

Marketer/Blogger/Coach at Empowered Team Leaders
Lisa is a passionate person who is inspired to take action and achieve results! Lisa loves to help others towards their goals and empowers them into Action!
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