Dropshipping is a means of retail fulfillment in which the store does not keep the products it sells. Instead, it purchases them from a third party supplier and has them shipped directly to the client. This way the merchant never has to handle the products. Many people are getting into this business and if it’s something you’re thinking of try yourself, here are some pointers to help you profit and to avoid the pitfalls.
The Benefits of Dropshipping
Here’s why you should consider dropshipping:
- You don’t need to make a large initial investment: You can get started online straight away without spending money on inventory. In spite of this, you can still offer your clients an amazing range of products.
- It’s so convenient and efficient: This is one of the easiest ways to launch and expand a successful e-commerce business, even when your resources are limited. Because you don’t have to concern yourself with order fulfillment, you can spend more time on marketing and customer service.
- Mobility: You can take care of business anywhere you can find an Internet connection.
Finding Dropshipping Wholesalers
The first step to take is to get an EIN number and a copy of your sales tax certificate. You will need to provide prospective suppliers with both these. Then you can start your search for a dropshipping wholesaler. If you have already decided what products your company is going to sell, the easiest way to find distributors is by contacting the original manufacturer. You can also search online but you must beware of scams and inaccurate information. A reliable source for dropshipping companies is the World Wide Brands directory. You have to pay for it, but it’s worth the expense to know that you are contacting reputable suppliers.
Pitfalls to Avoid with Dropshipping
- Competition: Because products which can be easily dropshipped will garner broad competition, if you’re not careful you could get caught up in brutal price wars and end up with a depleted profit margin. Instead of trying to beat your competitors on price, offer value in a different way.
- Keeping inventory: Because it can be tricky to sync your inventory you may end up with items being out of stock. You can resolve this issue by using several different suppliers for the same product line, so you will have a safety overlap.
- Selling goods you never see is tricky: Although you will never get to see your products, these days, manufacturers have extremely detailed descriptions on their websites. If you keep up with these you’ll soon become an expert in your inventory. If you have a specific question just give the manufacturer a call.
- Your business is more prone to mistakes if you involve a third-party supplier: This can be prevented by two things: hiring an experienced dropshipping company and using good software to keep track of your sales. Find out more about getting help with your hardware, software and consulting needs at iSeries.
If you want to become a retailer but you don’t want the expense of inventory and storage, dropshipping can provide an easy way to get started with the ability to leverage other people’s capital without having to make a great personal investment.