If you are an Internet retailer, a storefront retailer who also
has a website, a mail order retailer or a catalogue company, you
may find the concept of drop shipping attractive. After all, drop
shipping eliminates the need to buy inventory, store it, and ship
it out yourself. Working with a good manufacturer, importer or
wholesaler that will drop ship offers numerous benefits,
including low overhead costs and higher profit margins than you
might realize through regular affiliate programs. The beauty of
using such a service is that it allows you to focus time,
resources, and energy on building and expanding your customer
base and not on sending out products you have already sold.
The drop shipping process involves four basic steps:
- You advertise specific products and take orders for those
products.
- Upon making the sale, you receive your money.
- You then send the order along with the money for the wholesale
and shipping costs to the manufacturer, importer or wholesaler.
- They ship the product directly to the customer.
It is a simple, efficient process. That is as long as you are
working with a quality, trustworthy drop shipper. If you end up
contracting with an unreliable company or a scam artist, your
reputation, profit margin, and entire enterprise can suffer and
be destroyed. When deciding which companies you will conduct
business with, there are a few practices of which you should be
wary.
Most often you will be looking to work with a few companies or
perhaps even one company whose products you will represent and
sell. In essence you are marketing specific goods with the
resulting sales benefiting your company and the manufacturer,
importer, or wholesaler.
With this in mind, you should never be required to purchase a
membership in order to sell another company's products. The types
of companies that charge such fees usually say they offer a
complete array of goods backed up by a marketing department. They
will even include your own e-commerce website that you can use to
sell their items. Such turnkey businesses are replete with large
initiation and setup costs, monthly membership fees, and other
hidden expenses. Additionally, you are often only allowed to
offer their products on their site.
Does anyone ever make a profit from these turnkey businesses?
Yes, the people who sell them to unwitting retailers make large
sums of money. Do not fall for this scam. The only fees you
should ever be charged are those for the product and for shipping
the product. Legitimate drop shippers may charge you a fee, which
is however refundable once you have commenced trading.
Additionally, never pay a drop shipper a membership or license
fee for the right to have them drop ship for you. The concept
sounds ridiculous, and it should. It's another con. They are
already making a profit from the effort you are putting into
selling their product, why should you pay a license fee for the
right to have them ship that product? Should you pay for the
shipping? Of course, but that should be on a per item or shipment
basis and no additional charges should apply.
There are also lists of bogus drop shippers that are sold to
potential retailers. A legitimate business can spend hundreds of
dollars on such lists, which are really names of middlemen posing
as drop shippers. Contracting through these sham shippers will
result in you paying much more than you should for your products.
You may also be tempted to buy relatively cheap lists of drop
shippers. These lists are inexpensive because they contain out-
of-date and/or false information. When you try to contact the
companies on the list, you will find that they have gone out of
business or never even existed.
Finally, whatever companies you contract with, make sure that you
have it in writing that the manufacturer, importer or wholesaler
will not market to your customers. The customers you directly
sell to and the drop shipper, through your order, ships to,
belong to you and not them. You have done all of the ground and
legwork to sell to your customers and usurping them is not an
option open to your drop shipper. Any legitimate company will
agree to and honor such a contract.
Be sure to ask companies about their drop shipping policies,
including charges, length of time for delivery, return polices,
and backordering procedure.
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