Selling Without Inventory And The Dropship Business
Selling without inventory is dropshipping. Learn about the dropship business, drop shipping and selling without inventory here.
The dropship business is the starting point for most people. It enables them to sell without inventory, to get online with minimum expenses and to focus on getting customers.
If you are going to do business on the web, you have to understand it. This page gives you a lot of background information. And it gives you links to some important resources.
About Drop Shipping
Sell without inventory, increase the number of products that you sell in your shop without increasing your inventory, sell hundreds of products on Ebay without ever having to handle anything, sell hundreds of products from a home computer in a corner of your room. Don’t get involved in shipping, don’t handle goods, don’t put up with breakage and theft and all the other hassles of having a hard goods business. Use drop shipping.
“Drop shipping” is simply an arrangement between you and the manufacturer or distributor of the product you sell whereby the manufacturer or distributor — NOT YOU — ships the product to your customers.
Here’s an example: Let’s say Mary wants to set up a web site that sells skin care products. Instead of filling her basement with cases and cases of stock, and then going downstairs each time an order comes in, Mary puts together a drop shipping arrangement with a manufacturer who ships the products to her customers directly.
And the best part is that the manufacturer will happily ship the products using shipping labels with Mary’s company name, address, and logo instead of their own. The product arrives at the customer’s house a few days later, and they never know that the product wasn’t shipped directly from Mary’s warehouse!
Let’s say Mary has a product called the “Total Skin Care Package,” priced at $97. A customer visits her site, places an order, and is billed $97 plus $11 for shipping and handling.
Mary then sends the manufacturer an e-mail with her customer’s order and shipping information. The manufacturer packs up the customer’s order, puts Mary’s shipping label on the package, and mails it out via UPS or FedEx, usually within 48 hours.
The manufacturer then bills Mary for the WHOLESALE price of the “Total Skin Care Package” — in this case $64 plus $11 for shipping and handling. Since Mary has passed the shipping and handling fee on to her customer, she has just netted a profit of $33. AND ALL SHE HAD TO DO WAS SEND HER MANUFACTURER AN E-MAIL!
DROP SHIPPING ADVANTAGES
There are a few huge advantages to this model. First, it SAVES YOU THE COST of building your own inventory. If you’re like most people starting a small business, you don’t have a ton of extra money lying around. The last thing you want to do is tie up your cash in inventory that you may or may not be able to sell.
No inventory also means no leftovers. If the product you sell suddenly becomes outdated, obsolete, or just plain un-trendy, you aren’t the one with a house full of stock that nobody will buy. Many online retailers find themselves having to offer deep discounts — and taking huge losses — on old products just to get them out of their homes to make room for more inventory!
You’ll also be able to SKIP THE HASSLES of shipping your products. Unless you’ve already set up a shipping account with someone like FedEx or UPS, you’ll be heading down to the post office every day to buy stamps and mail out your products.
And you’ll be able to ADD NEW PRODUCTS ALMOST INSTANTLY. Since you don’t have to worry about ordering inventory, you can add products to your web site within a few hours. If you find that your customers are eager to buy a certain product, you can have that item up on your site in almost no time.
CHOOSING THE PRODUCT
Have you ever noticed that there are literally hundreds – if not thousands — of sites selling huge mish-mash selections of inexpensive gift items… things like plastic gnomes and porcelain figurines?
That’s because there are a few HUGE drop shipping companies that import these items and then recruit web sites to sell them on their behalf. These companies have massive product inventories and make it very easy for people to get started selling their products for them.
Unfortunately, this is NOT the way to go if you are getting started with drop shipping. There are already a ton of these giant gift sites out there — and way too much competition for you to reasonably expect to be successful at it.
Instead, spend some time researching different kinds of products that you might want to sell. The products you choose should be in demand but not widely available online. As usual, I highly recommend targeting a niche market rather than trying to find a product that EVERYONE wants to buy.
Once you’ve found a product that you think may be the right one for your business, you’ll need to do a little “competitive analysis.” This simply means finding out what potential competitors are charging for the products you want to sell and calculating how much of a profit you’ll be able to make.
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