You probably have read many articles or come across websites that promise to show you ways of making hundreds of dollars a day from working at-home businesses. Many of these sites and articles are written by scammers who trick you into giving them a lot of money for very little in return. Dropshipping is not one of those.
This article lists several legitimate ways that a stay home entrepreneur or small businessman or woman can make a profit through drop shipping. This isn’t a scam because I’m not saying that you will earn a lot of money very quickly; it will most likely take you a long time to earn a lot of money through dropshipping alone.
However, if you are a stay at home parent or a low-income earner who wants to supplement their earnings through online reselling then you should read this article and find out how to use drop shipping to your advantage.
What is Drop Shipping?
Dropshipping occurs when the merchandise ordered from your e-commerce site is sent directly from a supplier to your customer. Which means you do not need to order, stock or manage the products? This method minimizes your risk since you won’t have to purchase the product before you sell it. Suppliers are responsible for warehousing, packing, and commodity delivery. It saves the store owner a lot of money and is quite convenient
You can use this process to your advantage if you wish to make money from home. Some wholesalers and manufacturers have their websites online where you can check their stock and see if anything jumps out at you. You can then set up an eBay account or your website through which to sell these items. Because the wholesaler or manufacturer will drop ship you will never have any contact with the actual merchandise thus eliminating the need for you to have a storefront.
If this sounds like a good idea then here are a few things to take into account:
In most countries, wholesalers will only sell to legitimate companies so you may have to register yourself or your site as a small business. This means that you will have to be listed for tax purposes.
Make sure you understand the returns policy from the wholesaler. If a customer is sent faulty good they will contact you, so you have to know what you can do to assist them.
The profit will come from the difference in price between what you buy the items for and what you sell them for, but you will also get repeat customers if you sell quality items. Try to find the balance between a cheap wholesaler and one that has good quality stock.
Good luck and happy selling.
Problems with Stocking Inventory.
After making up your mind on the product to sell, you are immediately faced with different challenges, and here are some Question you may need and answers to:
Q1: Will I need to rent a store or warehouse space to stock my goods? I was hoping to sell by mail order or export, I planned to sell on the internet, I do not have much storage space for inventory at home?
Q2: If I don’t have a retail location, will the supplier do business with me? I had hoped to keep my overhead down by operating from home.
Q3: I know there’s a minimum order accepted by most manufacturers and suppliers, often in thousands of dollars. I don’t have such amount of money!
Q4: Even if I did have the money, why would I tie it up in inventory? How will I know if the product would even sell?
Q5: I guess I’ll need to add additional insurance cover to my inventory. Maybe while I’m at it I should update my security system.
Q6: Aren’t the shipping charges going to kill me? Since I will need to first pay to get the goods here, and then pay to get the goods shipped out to my customer!
Q7: How will I control the inventory if I grow and hire employees? How will I know if my employees are stealing from me?”
Q8: How much time and money will I spend on packaging and order fulfillment?
The point is all these problems can be reduced or eliminated when you do dropship.
Drop Shipping to the Rescue
Dropshipping is a way to sell goods without buying your inventory. You don’t need to stock inventory; you only order the item when a customer requests it.
When you make a deal with drop shipping, you contact the manufacturer or approved distributor and plan to pay for the order at your wholesale rate. The distributor then ships the product with your invoice and the shipping label to the customer.
Let’s say, for example, you’ve just sold a product to a customer for $100.00 plus $15.00 shipping fees. After receiving the invoice from the client, you will now give your order to your dropship supplier via fax or otherwise. You’ll need to pay your supplier your $50.00 plus $15.00 shipping fee, by credit card or other means. This leaves you a gross profit of $50.00.
This system comes with several benefits since you don’t have to buy inventory yourself.
You reduce the high inventory storage costs. You don’t need to rent costly storage space, fund high minimum orders, get stuck with products that don’t sell, or incur other costs related to keeping inventory.
Indirectly, you are paying inventory costs. Your drop ship supplier must protect your inventory and pay all the related expenses, including freight-in, storage space, insurance, accounting, shrinkage, etc. He has to pass those costs on to you to make a profit.
The real advantage of this dropshipping arrangement lies in keeping your costs variable. Instead of being stuck with these expenses upfront, whether you sell or not, you pay only when you make a sale.
Profit from Drop Shipping
Many legitimate dropship suppliers may not require you to have a retail location, but they will want to see evidence that you are in business. They may ask you to produce a resale license or permit for retail sales.
Reality is dropshipping has risks to look out for. Many vendors, for example, claim to sell at wholesale rates but sell more close to retail. In certain competitive sectors, such as electronics, margins are also very small. You should, therefore, be able to avoid these problems with proper research and knowledge.
Either from home, supermarket, directly from your website or via an online auction, you can make plans to sell an item before you purchase it. Yeah, you’ve spent nothing in inventory and won’t get stuck with stock that won’t be selling.
Instead of financing and stocking inventory yourself, you can simply change your story by drop-shipping to wealth.