Posts Tagged ‘drop shipping’
The Simple Process of Drop Shipping
Wednesday, March 12th, 2008
With thousands and thousands of online retailers, drop shipping has become one of the most popular ways of running a website behind the scenes. Basically, drop shipping allows a retailer to sell products without storing inventory, as their wholesaler or distributor stores and ships products to customers for a small fee.
Lots of small online businesses are enjoying the convenience and reduced costs of having someone else handle the inventory. And, because of the popularity of drop shipping among retailers, more manufacturers, wholesalers and distributors are offering the service in order expand the number or retailers selling their products.
How drop shipping works
1. Find a drop shipper and set up terms - Luckily, there are plenty of companies that offer drop shipping services. Even some manufacturers are offering the service, though it’s mainly for expensive or over-sized items. You can search for drop shippers on Google or goWholesale, in trade directories or at wholesale trade shows . You will find that you have plenty of companies and products to choose from. Once you have selected your drop shipper, it’s time to iron out the terms: shipping prices, drop ship fees, payment terms, shipment turn-around time, shipping methods, etc. Once you have an established account with a drop shipper, most will allow you to pay once every two weeks or once a month.
2. Take orders/sell the products - Now that you have your drop shipper figured out, it’s time to sell their products on your website. You will be legally required to collect sales tax when a ship to address is in the same state as your company’s physical address. If your website is run out of your house, then that will be the state you live in.
3. Give your drop shipper the order - Once you have an order (yeah!), then it’s time to pass it along to your drop shipper. Many drop shippers have an online management system where you can key in orders. Some systems even allow your store’s orders to be automatically synched with the drop shipper’s order system, depending on the system you use.
4. Pay drop shipper - Most drop shippers will either automatically charge your credit card every payment period or send you an invoice. You can work out the terms when you sign up with a drop shipper. Take into consideration that an automatic credit card payment may be more convenient and help you earn rewards points quicker!
There are several reasons why so many e-tail businesses are using drop shippers to handle their inventory - they don’t have to stock products, pay warehouse fees or deal with the hassles of shipments. For many small business owners, it’s worth the drop ship fee to make day-to-day operations simpler. Perhaps all that extra time can be devoted to opening up another online store!
Tags: advice, Carrie Hinkel, drop shippers, drop shipping, Product Sourcing, source, tips
Posted in News & Articles | No Comments »
The Basics of Drop Shipping for Online Retailers
Monday, December 3rd, 2007
If you’re interested in starting an online retail business, it’s a good idea to educate yourself about the basics of drop shipping . Drop shipping is a great tool for those seeking to build successful e-commerce retail companies. When you work with one or more drop shippers , you are able to offer products for sale via your website without having to keep an inventory or handle packing and shipping yourself.
To enjoy the benefits of drop shipping, you will need to locate wholesale suppliers that offer drop shipping service. Once you have found suppliers with the types of products you want to sell, you will need to verify that the prices are true wholesale rates that will allow you to earn a fair profit margin. Once you have the right suppliers in place, you’ll just need to build your online store and market your website. When customers place orders, your drop shipping company will handle fulfillment for you.
There are many benefits of working with drop shipping companies when you operate an online retail business. The investment required to start this type of business is minimal, because you do not have to purchase merchandise before it is sold. You also don’t have to invest in warehouse or office space to store an inventory.
Even though you don’t have to purchase your own inventory, you are able to benefit from bulk purchase discounts passed on via the drop shippers with whom you work. You can also offer a very diverse selection of merchandise to your customers since you aren’t subject to budgetary or storage restrictions when it comes to product mix.
The fact that drop shipping companies handle shipping keeps you from having to spend valuable time packing and shipping merchandise. Instead, you can devote your efforts to attracting new customers and repeat sales. The more effective your marketing efforts are, the more your business can grow, which benefits you and the drop shipper.
Before starting an online retail business, it’s very important to understand the benefits of drop shipping. With a strong website, a great internet marketing strategy, and one or more drop shipping companies with high quality products and a commitment to customer service, you’ll be on your way to operating a successful online retail business.
Tags: advice, drop shippers, drop shipping, E-Commerce and E-Business, online retailers, Product Sourcing, retail, source, tips
Posted in News & Articles | No Comments »
Drop Shipping Inside and Outside of the U.S.
Wednesday, October 3rd, 2007
The success of drop shipping businesses in the United States has meant there is a growing awareness of the potential of this endeavor both among citizens of America and those who are located elsewhere. One fact about drop shipping is that it has enjoyed its creation and rise in the U.S. - and that means that by far the vast majority of businesses that revolve around drop shipping will have to use a drop shipper based out of the United States.
There are a couple of scenarios for a small business that uses the services of a drop shipper in the U.S. while being located outside of the U.S. themselves. The first is a business which relays the items to customers in the United States, the second a business which uses the States-based drop shipper to get goods to clients in a country out of the United States.
In each case, there are several different considerations you need to keep in mind in order to ensure that your business runs smoothly.
Using A US Drop Shipper: For U.S. Customers
This is by far the easier of the two scenarios. The only paperwork you will have to worry about are your own records of business; that is, the summation of sales and profits that you will use to calculate your taxes and plan your business year at year end.
You should keep a couple of things in mind. First of all, check to see what level of income you can generate through sales according to your government before you have to start adding sales other taxes. Failure to do so, and to accommodate this in your final sale price, could see a big dent put into your profit margin at the end of the year. Second, keep a close watch on the international money market; it can vary greatly week to week, and that means a lucrative proposal could turn into a money losing endeavor in a matter of months.
Using A US Drop Shipper: For Non-U.S. Customers
Using a U.S. drop shipper for customers who do not live in the United States is a much more complicated proposal, and one which requires a lot more attention to detail. Right off the bat, you need to be sure to include sales tax, goods and services tax, and any applicable duties within the final sale price. Often there are brokerage costs included as well, and of course you can’t forget the all important greenback-to-other-currency ratio.
Finally, in all scenarios, never forget that while there are plenty of legitimate drop shippers based out of the United States, the industry has given rise to many successful scam plans as well. Using a foreign drop shipper means it is that much harder to check up on their legitimacy, and they may not operate under the same governmental regulations as you have to abide by. Make sure to dig deeply into the history of any drop shipper you are thinking about using; don’t take the word off of just a handful of sites - make sure to explore several companies before committing.
Tags: Doing Business Internationally, drop, drop ship, drop shipper, drop shippers, drop shipping, Leeia Ladipoh
Posted in News & Articles | No Comments »
Choosing the Right Drop Shipper
Thursday, September 27th, 2007
Drop shipping is one of the best ways to supply products for your online business without worrying about manufacturing processes or warehousing costs. You get to concentrate on marketing your business while someone else handles the shipping. A drop shipper sends the goods to your customers, so you don’t have to. Another advantage of drop shipping is that you don’t have to pay for products until you sell them. That translates to less risk for you.
Selecting the right drop shipping vendor is important because a good supplier won’t let you down when you make sales. So how do you find a reputable drop shipper for your online business?
First, before you even begin, it’s important to set your business up properly. Even though you’ll be working online and someone else is going to have their hands on the actual products, it’s a good idea to apply for a business license and tax ID number. Treat drop shipping as a real business - this means you will have to pay taxes and cover yourself legally just as you would if you were running a more traditional business.
Secondly, search for reliable and reputable wholesale drop shippers that provide stellar products you can sell in large volumes to a wide variety of people. With drop shipping in particular, making a large amount of sales is crucial to turning a profit.
Once you’ve found a good drop shipper, make sure you invest a lot of time to properly market your business online and through Internet auction sites such as eBay. This will also allow you to test out your drop shipper and make a final decision about whether or not you want to work with them. If the experience doesn’t work out from the start, when you’re still growing as a business, it may be a good idea to look for another drop shipper and save yourself some trouble down the road.
So how exactly do you find a drop shipper? A good way to start is to create relationships with wholesale drop shippers. You need to create solid contacts so that your business will thrive. Source out drop shippers through your own local research, as there are many scams online that you should avoid at all costs. The best way to start looking for drop shippers is to research companies and contact them to find out whether or not you can strike a drop shipping deal.
If you do decide to search for a drop shipper online, make sure you research them thoroughly and peruse drop shipping review sites to find out which companies are the most trustworthy. Try to work with a company that will allow you to sell products in large quantities so you can make a good profit. With drop shipping in particular, you have to sell in large volumes to be successful. Look for a drop shipper that offers products in demand.
When choosing a drop shipper you really have to avoid companies that act as middlemen. You won’t find good prices with these companies, which falsely sell themselves as drop shippers. It’s very important to do your homework. Research the drop shippers on your short list and try to find the best company for you. One sign of a good drop shipper is their willingness to communicate with you quickly and efficiently. You don’t want a drop shipper to leave you in the dust when you need them the most.
In the end, as long as you do your research and find a reputable drop shipper, you should be able to build an online business that will continue to grow into the future.
Tags: advice, drop ship, drop shipper, drop shipping, Product Sourcing, source, tips
Posted in News & Articles | No Comments »
The Value of Drop Shipping
Monday, August 6th, 2007
Most retailers agree: drop shipping, if used properly, is a huge time and labor saver.
But is it a money saver as well? It is often said that time is money. But just what is the true value of drop shipping?
We will attempt to answer that question in this article from a scientific approach, using logic to come to a conclusion as to what the value of drop shipping is for you.
The value of time is different for everybody. For Bill Gates, an hour of his time is so valuable you probably wouldn’t ever be able to pay him enough for his time.
Sometimes at the company I work for, we bring on interns. Usually they work without pay. What does the intern consider to be the value of their time? They are giving of their time, and getting no money in return. They consider their pay not as a present monetary figure, but as experience gained, which will in turn makes them more valuable to other companies. Thus it could be said that an intern is considering the value of their time as something that will be paid off in the future.
If I were to invest in the stock market, I would probably spend a good amount of time researching various stocks before deciding on what to invest my money in. I would then wait for a (perhaps very long) period of time before cashing out my stocks.
In such a case, I’m investing my time in the hopes of getting a future payoff for it. If I consider my time to be worth $50/hour, then my goal would be to get a $50 future return for every hour I spend doing research.
When using drop shipping to run part or all of your retail business, you save time by having somebody else track inventory as well as pull and package orders. Additionally, you don’t spend any time running to the post office to have orders shipped.
As an online merchant, you’re well aware of how much time and money you spend preparing an item description and packaging and shipping products. By following the traditional auction model, you actually spend more in time and money to deliver less merchandise. With drop shipping, you can significantly increase productivity, slash costs, and boost your bottom line.
In this article, I demonstrate how you can incorporate drop shipping into your current online business to save 55 minutes on the following tasks:
*Prepare the item description
*Package and address the item
*Ship the item
You also save money:
*Your hourly rate for performing these tasks
*Packaging materials
*Shipping costs
*Mileage to the post office
Let’s do the math.
Saving 12 minutes preparing the item description
I’m a bit of a perfectionist, so I spend at least 30 minutes snapping and editing photos for a single item. (I almost always use multiple images in my item descriptions). Subtract 15 minutes for perfectionism, and let’s conservatively estimate that the average seller spends 15 minutes preparing and uploading pictures for an item description.
With drop shipping you can use the supplier’s images-typically a higher quality than the homespun variety, and they require no time investment on your part. You can trim at least 12 minutes off your time investment for taking pictures, editing images, and uploading them to eBay or a third-party image hosting service. As an added bonus, you get a higher quality image.
To save you even more time, quality dropshippers provide members with rights to "hot link" to the images hosted on our servers. I have personally trimmed my time investment on photos from 30 minutes to 30 seconds using hot links to supplier images!
Furthermore, in most cases the supplier provides an item description for you which again saves you more time. However, since many sellers like to add to or rewrite altogether the item description, we won’t include this time saver in our calculation.
Saving 3 minutes in packaging
Traditional packaging time varies. For a small item that fits in an envelope, you can address the envelope, slip the item into it, and seal it in less than a minute. Larger, bulkier, more fragile items can take even a seasoned packer 10 to 15 minutes to properly package and address. Let’s make a conservative estimate of 5 minutes to package and address an average item following the traditional model.
How much time can you save in packaging with drop shipping? Oh, wait a minute… you don’t have to worry about packaging! You simply place the order online, and the drop shipper packages the item for you. So, that’s 5 minutes minus about 2 minutes for placing the order online for a total savings of about 3 minutes.
Saving 40 minutes in shipping
A single visit to the United States Postal Service can easily eat up 40 minutes of your day. An average round trip takes 30 minutes or more, at least for me, and you may have to wait in line for 5 to 20 minutes, depending on how busy your local post office is and how few clerks are working the counters.
Your post office may have a self-serve counter where you can weigh your package, input the dimensions, and pay at a machine that calculates the postage for you, but that’s still a 5- to 10-minute job assuming you don’t have to wait in line to use the self-serve machine.
With drop shipping, you slash your shipping time from 40 to zero when you place your order. The supplier ships the package for you.
Admittedly, you can minimize the traditional shipping time expense by packaging and shipping multiple items on a single trip to the post office, but with some drop shippers, you simply input the addresses into your account, and you’re done.
Calculating your total savings in time and money
By incorporating drop shipping into your online business, you just saved 55 minutes and slashed your operating expenses. Let’s break it down to demonstrate precisely how much you stand to save in terms of money:
$2.00 in packaging materials, on average (envelopes, boxes, peanuts, bubble wrap, tape)
$0.80 in fuel (assuming 35 mpg, regular gas at about $2.80/gallon, a round trip of 10 miles, not including insurance and maintenance costs of your vehicle)
$7.38 in hourly pay (assuming 55 minutes saved at minimum wage of $8.05/hour)
Do the math, and you realize that drop shipping just saved you $10.18 processing a single item. And that’s what you save if you use very conservative estimates. Just think how much you stand to save if you typically earn $25/hour or $50/hour or $100/hour!
When using a trusted dropshipper, you can slash your costs both in time and money, freeing up resources to invest in market research, networking, managing and growing your business, or just kicking back to enjoy your additional free time.
But to me, drop shipping isn’t just about the time and money I save. The truth is I absolutely HATE packaging, addressing, and shipping. Drop shipping is more about preserving my sanity. Instead of having to focus on menial, unrewarding tasks that I find annoyingly boring, I can focus on the more stimulating and satisfying aspects of running and growing my online business. Drop shipping is the less stress, less hassle way of merchandising online.
Stuart Lisonbee is an eBay Certified Consultant and Doba’s first-ever Education Specialist. Prior to joining Doba , Stuart worked for eBay as a Customer Support Representative, and ran a retail department store’s PowerSeller-level eBay business. Stuart has authored over one hundred articles on online business success, along with several eBooks designed to help others grow their eBay businesses.
Tags: advice, doba, drop ship, drop shipping, ebay, Product Sourcing, source, stuart lisonbee, tips
Posted in News & Articles | No Comments »
To Drop Ship Or Not - That Is the Question
Wednesday, January 3rd, 2007
Blind drop shipping is where you have the products ordered from your company shipped from the factory directly to the customer with your label as the return address. By having your business’s return address on the package, the product supplier information is kept confidential from the customer and they deal with your company for any returns or customer service issues.
Advantages of Blind Drop Shipping
There are several advantages of using the blind drop ship delivery model for your business:
* Inventory levels can be kept at a minimum
* Less exposure to shipping difficulties and stress is limited
* Revenues are collected up front for what you sell online, and you pay for the inventory at whatever terms you have negotiated with the supplier
* With your address label as the return label, your customer think it’s coming from you
When blind drop shipping works smoothly, it is an excellent business delivery model. There is no inventory piled up at your location, no seemingly endless trips to the post office or UPS. You just set up your website, process the orders, send them along to the manufacturer or wholesale drop shipping company, and the products show up coming from you. Some drop ship manufacturers and distributors will even help you with advertisements, special deals, and pictures to help you with the advertising of their products. Many of the retail catalog companies you are familiar with use blind drop shippers as their means of supply.
Disadvantages of blind Drop Shipping
There are several disadvantages to drop shipping that can be detrimental to your sales and profits, depending on your business model. If you are an eBay seller, you might want to think twice before attempting to set up shop with a blind drop shipping delivery system. It can be difficult to find a drop shipping supplier who can always deliver on a consistent basis. Manufacturers and wholesalers have run out of product before, and if they run out of a product you’re auctioning and you wind up back ordered, the negative feedback can add up in a hurry (there are ways, however, to deal with back orders ).
Depending on the supplier and your relationship with them, there can be fees in order to get the product out of their factory or warehouse and into the hands of your customer. That fee can range anywhere from 5.00 to 10.00 dollars, or even higher depending on the item. This fee in addition to the eBay fee can eat up profits, so you need to be very careful in establishing your item selling price points.
In today’s information age, customers like to track the shipping path of their products, knowing exactly when they are going to arrive at their door. This desire for tracking the package can cause a kink in your blind drop shipping delivery strategy. It is possible to work with your drop shipper and have the shipping source listed as a remote warehouse, but astute consumers will find out you are drop shipping. Your business has a choice to make at this juncture. You can either have a policy of not giving out tracking information, or you can give out the tracking info and be prepared to deal with any consequences that might arise. Most retail customers will not be concerned about the source of shipping; but you could have a question from a business to business customer, so be prepared.
Returns
When a customer wants or needs to return or exchange a product, you need to be prepared. You can either use prepaid shipping labels to your business’s address, processing them at your location, or on the prepaid shipping label have “remote warehouse” or your company’s name and “Return” on the label so the drop shipper knows it is a return. If you handle the returns yourself, you can have more control over the customer’s experience; but you will incur extra shipping charges. It really depends on the type of business you are running and what you are comfortable with.
Blind drop shipping offers an interesting delivery vehicle option for those wanting to start an online business requiring little to no inventory. As with any potential supply chain, there are advantages and disadvantages to using this type of product sourcing and delivery. Evaluate your options, potential suppliers, and costs carefully and make the best decision for your situation.
Tags: advice, drop shippers, drop shipping, ebay, ebay seller, larry Slusser, Product Sourcing, source, tips
Posted in News & Articles | No Comments »