Drop shipping has emerged as a good, long-term business model owing to the fact that it requires zero investment in stock. A large number of online businesses use drop shipping as they don’t have to store, handle, or ship merchandise, and commit an enormous amount of money buying stock that may or may not sell. All that they have to do is punch their orders into the computers, and the dropship companies they have contracted with, ship the products directly to their customers.

While the dropshipping arrangement appears to be an attractive proposition to many online merchants, it is not free from challenges and risks. There are many issues pertaining to the drop ship company – their credibility, pricing, drop ship fees and charges, shipping, support, returns and refunds, chargebacks etc., which if not made clear can result in significant business losses for the beginner.

Here are the key strategies recommended by some highly successful online retailers, which the starters can follow and use dropshipping to their best advantage:

Deciding on your niche products: Avoid products that are in hyper demand as these come with very high competition. Dropshipping works very well for niche markets where one can focus on a specific market segment. So take time to research your niche (a high profit niche), your competition, keyword volume, PPC prices etc. before you decide on a product.

Selecting a drop ship company: This must follow intensive research. Once you have decided on your niche products, find the prominent drop ship companies and have a detailed understanding of their pricing, stock levels, drop ship fees, Volume discounts, Returns/damages, and everything else you may feel is relevant to your product and business. Checking the legitimacy of drop shippers can be done by:

- Looking for their reviews online
- Calling them upfront and watching out whether they respond professionally
- Making sure they have an SSL (Secure Sockets Layer) certificate

You can also visit verified dropshippers directories like eSources, WholesaleDeals and WorldwideBrands that list thousands of legitimate wholesalers and dropshippers. In fact using such good directories is the perfect shortcut to identifying profitable niches and making a success with dropshipping.

Designing the website for your drop shipping business: The content, Title Tags, Keyword Density and the Internal Linking Structure should be such that the site looks professional, is easy to navigate, is secure with an SSL certificate, and also easy to reach via Phone, Email or Chat. A simple but presentable, clean and not spammy website that ranks highly in Google is what makes reputed wholesalers of a particular niche respond positively to the opportunity of working with you.

Meeting the MOQs (minimum order quantities): Most drop-ship companies do not require any minimum order quantities. While this comes as a benefit, you may have to pay a slightly higher price (than the wholesale price) for the products at first. With time, as you demonstrate some good order volumes, you can demand lower prices for your products.

Dealing with customer issues like warranties, support and returns: Though necessary, your warranties and returns policy will call for many unforeseen and fake customer claims. Hence to mimimise your losses, you can ask for Re-Stocking fees on returns. If however you feel that something is damaged and it's not the customer’s fault, you can refund their money completely and approach the supplier or Fedex for the cost and compensation.

Drop shipping from China: It is best to deal with wholesalers who are based in your home country and ‘warehouse’ all products locally, even though they may actually produce them overseas. Avoid dropshipping from distant sources, and be finicky with dropshippers based in China. This is because many of them are unreliable and you may also incur very less or no returns due to the long shipping times.

Dropshipping certainly offers a host of advantages in that there is no capital investment and no danger of accumulating a pile of outdated items in your inventory. By following the above strategies and best practices, you can use the technique to your utmost benefit and acquire good, tangible results in no time!