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Benefits and Procedures
Drop shipping is a method of order fulfilment that does not require the business owner to handle or warehouse any of the merchandise.
The drop shipping concept is quite simple: The business owner advertises the product or puts it up for auction at eBay. The item is purchased and paid for. The business owner then passes the customers information, along with the payment for the item to a drop shipper. The drop shipper then fills the order and ships the item to the customer.
Drop shipping is very popular among eBay sellers.
The concept allows anyone with a computer, a telephone, and Internet access the ability to start their very own business – through eBay auctions or private websites! There is no need for warehouse space. There is no money spent on shipping items or packing items. All you do is market the items, and pass the information on to the drop shipper.
Drop shippers typically charge wholesale prices.
To make a profit, you simply charge your customers the retail price, and pay the wholesale price to the drop shipper. The difference is your profit. Depending on the product, you can charge 30% - 50% above the wholesale price. For many items, you can charge even more.
Drop shipping allows people to start businesses without taking huge financial risks.
If you had to stock a store or warehouse with product, you would be spending a great deal of money before you made your first dollar. With drop shipping, you can actually earn money before you spend it, and see a profit right from the start.
Drop shipping also saves a great deal of time.
You will not have to concern yourself with stocking packing materials, or packaging the items that you sell. You will not have to deal with the post office or shipping companies. You will not have any inventory to keep up with at all.
Your biggest headache with drop shipping will probably be back orders.
If you advertise an item and sell it, then find out that the drop shipper is out of that item, you will either have to back order the item for your customer, or find a different drop shipping company that has it in stock. If you aren't careful, you could end up losing money on the sale. Keep in constant contact with your drop shippers to ensure that you are not promoting items that are no longer in stock!
With most drop shipping companies, you will need to establish a relationship before they will allow you to work with them on a credit basis.
In the beginning, you will need to pay for the products your customers buy before those items will be shipped. For fastest possible delivery to your customers, make sure that you have a credit card for these purchases, or a way to quickly transfer the funds for the items to the drop shipper.
Eventually, you should be able to work out an arrangement with each of the drop shipping companies that you deal with.
Once you work out a credit arrangement, make sure that your bills are always paid on time to ensure that a good working relationship continues with those companies. Remember that you are dependant on those customers both for the product, and for order fulfilment.
Drop shipping is the answer to starting your own eBay business. Many successful eBay power sellers would not have a business at all without drop shippers. If starting a business is your dream, but you never thought you would have the capital to start such a business, drop shipping and eBay are the answers you have been looking for!
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