What Is Dropshipping?

Dropshipping is one of the newer ways to do business online. It entails the taking of orders from either your own web site or auction type web sites like EBay or Craigslist among others. You take the order and pass it on to your dropship wholesalers or dropshippers.

Dropshippers are companies that stock merchandise and take care of the physical shipping on your part. Sounds a little overwhelming, but here is a short synopsis of how this is easily done.

Sign up with any of a number of wholesale dropshippers. There maybe a membership fee involved. This fee can be either a monthly membership charge or on a "per sale" basis. This membership entitles you access to their entire inventory. Wholesale dropshippers offer this inventory to you at wholesale prices. They also tell you specifics of the item, what the Manufacturer's Suggested Retail Price (MSRP) is for that item and what the freight is going to be. That way you know the entire cost of the items you are selling including freight.

The aim is to create the greatest possible margin of profit. Typically, if you can offer it at a price less than the MSRP, buyers will usually purchase it. If you're smart, you can figure the freight into the sell price and offer free freight to your customers for an extra sell point. To compare prices, search on google for the product you are wanting to sell to make sure you are competitive while still making a profit.

Now, you take an order and collect the payment and shipping information from the buyer. All you need to do is go to your dropship wholesalers and place the order with them. When they ask you for the shipping address, have it sent direct to the buyer on your behalf. You keep the difference between the wholesale price from the dropshippers and the marked up price to your buyer. Simple and straightforward.

Using dropship wholesalers gives you the opportunity to offer brand new items in the factory packaging. In most cases, the manufacturer's warranty is in force, but that is up to the buyer to register the purchase with the manufacturer. You do not have to worry about returns or faulty items. However, the customer may come to you as the place of purchase if something goes wrong with the product.

Many dropship wholesalers will have a service that interfaces with the major auction sites, so you can open an entire storefront and NEVER physically handle any inventory or deal with shipping materials. All you do is offer the material for purchase, take the payment and process the order through the dropshippers.

The word "dropshipping" is a compound of two words: drop and shipping. The meaning is that you process the order and "drop" the shipping to a third party; your dropshippers. If you do this properly and offer the right items, you can make a substantial amount of money, especially in custom niches.

Finding a wholesale dropshipper is as easy as doing a web search, though this takes some time. The better way is to register with a directory of tested and proven dropshippers. This is much quicker and gets you on your way to profits.