What is Drop Shipping?
If you've ever wanted to start selling physical products but it was too expensive to get started, then drop shipping might be for you. Drop shipping is a business model that allows you to sell products without buying inventory, storing it, or having to deal with shipping to customers. Instead, manufacturers, wholesalers, and even retailers create/buy the product, store it, and ship it to your customers. All you need to do is the marketing and selling of their products.
In traditional retail business models, you take the risk and expense of buying inventory, managing storage, and shipping to your customers. This is a more expensive model to start and it involves more risk if you can't sell your product inventory. You also pay for storage costs (store space, storage) and deal with the hassle of shipping.
Now, why would manufacturers and wholesalers be willing to take on the risk?
The biggest reason is the marketing cost. Getting product exposure can be hard. They would rather focus on creating products and managing logistics while partnering with drop shippers to sell their products.
There are many manufacturers, wholesalers, and retailers that provide drop shipping services and are looking for drop shippers to sell their products. You can find drop shipping products for almost any product category. You can find furniture, car parts, gardening equipment, watches, phone accessories, etc. The list can go on. If you can think of a product niche, there are most likely companies that will drop ship those products for you.
How Does it Work?
How Do You Make Money?
In drop shipping, you make the difference between your retail sales price and the wholesale price of your drop shipping provider. The margins tend to be smaller than the traditional buy and sell business model but you don't take the risk of buying inventory, storage, and shipping.
Logistics of Drop Shipping
When a customer goes to your site and buys one of your products, they don't know your products are coming from a dropshipping company. After checkout, your company will receive the full payment from the customer and the customers will receive their order confirmation and shipping information from your business.
At the same time, your dropshipping product provider will also receive the order confirmation from your customer. Once they receive the order confirmation, they'll charge the card you have on file with them at the negotiated wholesale price. Your company makes the difference between your retail price and the negotiated wholesale price.
They'll pick and package the product and send it out to your customer. Even though your drop shipping provider sends out the package, the return label will show your companies name and address and your company info will appear on the invoice and packing slip. Once the shipment has been confirmed, the dropshipping provider will send your company an email with invoice and package tracking information.
What Are The Pros & Cons?
- Simple to start
- Low startup cost
- No inventory to manage
- Low risk
- Work from anywhere in the world with a computer and internet connection
- No shipping required
- Lots of product category niches to choose from
- Low margins on products
- No control over shipping
- No Inventory control
- Shipping complexity on multiple product orders from different suppliers
- You can't control the product experience
Estimated Startup Cost
Key Activities in Drop Shipping
In an e-commerce drop shipping business, most of your time will be spent marketing your products. That's time spent branding your company, getting product exposure through different product outlets, social media, and other marketing channels. The rest of your time is spent on managing supplier relationships, finding new products and partner suppliers, customer support, and maintaining your website.
Start Drop Shipping
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By Anton Kraly
Drop Ship Lifestyle is an Online Training System & Community for eCommerce Entrepreneurs.
Drop Ship Lifestyle® was created to give students the knowledge and tools necessary to create freedom through entrepreneurship by leveraging the power of dropshipping.
Here's How it Works:
- You choose a niche that meets our criteria, and we verify it will be successful!
- We teach you how to source top-tier suppliers in your niche.
- We provide you with the Drop Ship Lifestyle® Theme to build your store.
- You copy our supplier approval scripts and become an Authorized Retailer for premium brands.
- We provide you with the Drop Ship Lifestyle® App to increase conversions and automate order fulfillment.
- You use our proven traffic systems to get high-quality website visitors from Day 1!
- You will stay motivated by being plugged into our community of successful dropshippers.
- You get priority support on our live monthly coaching calls!