How Do I Use The Drop Shipping Method?

In any business, you can often find some way to increase your profits. One way you can increase your income on eBay is by using the Drop Shipping method.

Drop shipping is where a customer places an order through you, and you pass that order on to a drop shipper. The drop shipper handles all of the shipping procedures to get the product to the customer. You do not warehouse the product, or handle it in anyway.

Most drop shippers offer their products at wholesale prices. You charge your customers the retail price, pay the drop shipper the wholesale price, and the difference between the two is your profit. The markup on almost any product is typically between 30% and 50%.

You will need to do research to find the best selling items on eBay before you can determine which drop shippers you will work with.  

Don't pick the very first thing you come across because you think it might be a good seller.  Use the tools that eBay provides to find out what the hot selling items  are. Find out if there is a big demand for specific products and determine how much competition there is in this market.

Once you know what you should sell, find drop shippers who sell those items at wholesale prices. Compare prices to find the best possible deal. Keep in mind that you will only get away with charging so much to your customers – the less you can pay for the product, the better off you are.  

You will be working with several drop shipping companies in most cases. Be careful when you are looking for drop shippers. Make sure they have a good reputation before you do business with them.  Don't waste your time, or lose your money to companies that are running drop shipping scams. This can only be avoided by researching the companies that you hope to do business with.

Drop shipping usually runs like a well oiled machine – but occasionally problems arise. The biggest problem you will usually face is that the drop shipper is out of stock on an item you just sold. This means that you must quickly find a drop shipper that has the same exact price, and in many cases, you will end up with less of a profit.

For instance, if you auctioned off a widget because you found a drop shipping company that had an incredibly low price on widgets, enabling you to offer a lower price to your customer, you may lose money. If the company runs out of widgets, you will have to pay the higher price for the same widget at a different drop shipper. If no other company has the widget available, it will have to be back ordered, and you will have to tell your customer the bad news.

Another problem you may encounter is product returns.  If you know how to deal with these situations, you are way ahead of the game. But if not, you need to be prepared in advance. Find out what the policy is for returns with the drop shippers that you plan to use.  Have a refund and return policy in place, and act fast when this situation arises.

The drop shipping method works well on eBay. Many people are making very nice livings using this method. It all depends on figuring out which products are hot sellers, and which drop shipping companies have the best prices with the best service. You can essentially have an eBay business up and running in a matter of hours or just a few days when you use the drop shipping method.