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ONLINE BUSINESS HELP

Drop-shipping – a great way of making money online
By: Developer Shed
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    2004-11-16

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    Drop-shipping – a great way of making money online
    by Nowshade Kabir

    Using the Internet to sell products and services to ever increasing number of net users is a good way to start your own business. If you are not taking advantage of this great opportunity you are just missing the boat! Consider this: e-commerce, contrary to popular believe, is thriving and
    increasing at a double digit growth rate. According to Jupiter Research, Online sales during this holiday season in United States are expected to reach $21.6 billion, a 19 percent increase over the same period last year. Jupiter also predicts in the report that 86 million U.S. residents will make
    holiday purchases online this year compared to 73 million last year, which is an 18 percent increase.

    No doubt that this is the right time to get into online business. Building a website for selling products or services is no longer that difficult. You can make your own website by using available sophisticated but easy-to-learn-and-use programs like Macromedia Dreamweaver, Microsoft Frontpage, Adobe Go live, etc. There also exist various online web store builders similar to Rusbiz.com, which allow you to create powerful web stores using simple editors and numerous templates. You can also setup a store with E-bay and sell products through it. Finally, you can hire professional web designers to develop your website. So, the important question isnot how to get online, but what to sell on the Internet?

    In one of my articles – What to sell on the Internet?
    (http://ezine.rusbiz.com/archivenews.html?nl_oid=19) – I wrote about selling information products. Although this is an interesting concept, you might think that this is not your cup of tea; and you still prefer to work with some tangible products. In ideal scenario, probably, you want to sell a product of your choice but don’t want to carry your own stock and don’t want to handle the shipping. Is there a way of doing this? Yes,there is! It’s called “Drop-shipping”.

    What is drop-shipping?

    When a manufacturer, wholesaler, distributor or importer, after receiving an order from their
    retailers, individually pack and deliver the product to the customer of the retailer with retailers address as shipper, this selling technique is called drop-shipping.

    The advantages of drop-shipping include:

    - You do not have any inventory. So, there is no stock carrying expense involved.
    - You pay for the item only when it is sold and you got paid from your customer. You don’t need to invest money in buying the product.
    - You can sell just one item at a time. No minimum quantity required.
    - Your drop-shipper will supply you with necessary product image and specification. You don’t have to spend money on creating your own.
    - You fix your own selling price of the product. Convenient, when you know your niche market well.
    - You can offer various products on your web store from multiple suppliers.

    Select a product to sell

    Once you decided to go with drop-shipping you need to find products to sell and find drop-shipping
    suppliers for those products. According to the same report from Jupiter following are the most favorite categories for online shoppers: Books – by far the most popular category, after that comes clothing and shoes, music, toys, video tapes and DVDs, gift certificates, consumer electronics, accessories, videogames, bed and related items, and bath items. You should also consider that this year, total Internet sales of consumer electronics are expected to rise 32 percent to $7.5 billion, making it the fastest growing group among all retail sales categories online.

    The market research wizard developed by Worldwide Brand Inc. is a great tool, which shows in a probability scale whether it is worthy trying to sell your selected product online or not. You can find it over here. (http://www.worldwidebrands.com/?8188)

    Locate drop-shipping companies

    After selecting the product the next step is to find a reliable drop-shipper for it. This might not be an easy task! The things that you should look into a drop-shipper are the followings:

    1. A reputable supplier with drop-shipping experience
    2. Ready to ship one item at a time
    3. Do not ask for any membership payment
    4. Will use your name as shipper
    5. Will enclose blank invoice or invoice from you
    6. On the packaging there will be no indication that they are the supplier.

    You might think that the easiest way of finding a drop-shipper is just to buy one of the numerous
    lists on the Internet for sale. I won’t recommend you to use them for number of reasons. Often, these lists are outdated or carry wrong information. Even if you find the companies through the lists, since many people use these lists, you get into fierce competition for market share not even starting to sell.

    Use the following approach instead:

    Online search

    The first step is, naturally, to use the search engines. Using various combinations of the keywords
    of your product with words: manufacturer, wholesaler, drop-shipper, dealer, see if you can find the original source of the product.

    If several online retailers are already selling this product, do some detective works! Check out the sites thoroughly. May be, you can find a clue, which will help you track down the supplier.

    If it is an imported product go to the sites like Alibaba, ecplaza, Rusbiz, trade-india. Locate the
    manufacturer and get in touch with them to find who you should contact in your country to retail sell their products. If the product is manufactured in North America, the best source to find them
    is Thomas register.

    Trade exhibitions

    You should definitely attend the trade shows related to your category of products. This is an easy way to find a number of suppliers, who might be willing to work with you.

    Trade magazines

    Trade journals and publications are also a good resource for finding suppliers of your products.
    Although, you might have to go through a sizable quantity of them before you stumble on the right
    supplier.

    Conclusion

    Drop-shipping has some inherent drawbacks too. The biggest of them is you have to totally rely on the drop-shipper to fulfill your order and get the product to your customer on time. The others are: you don’t have any control over the price or availability of the product. However, a good
    drop-shipper cares for his reputation since his business depends on retailers like you. That’s why
    you have to be very careful in choosing the right drop-shipper.


    About the author

    Nowshade Kabir is the founder, primary developer and present CEO of Rusbiz.com. A Ph. D. in Information Technology, he has wide experience in Business Consulting, International Trade and Web Marketing. Rusbiz is a Global B2B Emarketplace with solutions to start and run online business.
    You can contact him at mailto:nowshade[at]rusbiz.com, http://ezine.rusbiz.com/archivenews.html?nl_oid=47

    DISCLAIMER: The content provided in this article is not warranted or guaranteed by Developer Shed, Inc. The content provided is intended for entertainment and/or educational purposes in order to introduce to the reader key ideas, concepts, and/or product reviews. As such it is incumbent upon the reader to employ real-world tactics for security and implementation of best practices. We are not liable for any negative consequences that may result from implementing any information covered in our articles or tutorials. If this is a hardware review, it is not recommended to open and/or modify your hardware.

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