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    1. Philbo is offline

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      #1

      New to online drop shipping - Making money using drop ship suppliers

      Hi there....

      I am a newbie genuinely looking to research drop shipping ... so any pointers post away! For the record I'm big into facebook shops and e-commerce sites for a living.

      I came across drop shipping when talking to a potential customer and can't believe I've missed this!...

      Is there money to be made?
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      #2
      Hi Philbo,

      Welcome to Wholesale Forum

      You appear to have already done your market research, and you sound experienced in marketing and product promotion. That is the perfect way to start.

      Drop shipping is a not a get rich quick scheme, but can be a great help for starting sellers with limited capital to invest. Long term, if set up properly, it can generate significant revenues; it has been done to the tune of millions in the past, and it can be done again. When you use a drop ship supplier you do not have to invest large amounts of capital to start up your business, because you don't need to buy the stock upfront or store it. This is the main appeal and theoretical advantage of using the drop shipping method. But of course, if it money was that simple to come by, everybody would be rich. And we all know that's an impossibility.

      Drop shipping is no exception to this rule. Its apparent simplicity is the reason it is plagued by more scam artists than most other online industries. The following thread explains how to avoid some of the pitfalls:

      https://www.wholesaleforum.com/discu...-one-year-530/

      Drop shipping will only work if you are able to identify the direct drop ship sources, and if you are able to set up a trading arrangement with them. It's this initial hurdle that, once crossed, will open you the door to significant opportunities. Do not confuse paying a fee to a drop shipper with crossing the hurdle; they are two different concepts altogether. Many start ups fall for the easy-to-find drop shippers that flood search engine results. Those drop shippers are a bad choice for many reasons, including:

      1. They tend to be middlemen who do not stock any products, but instead use top level drop shippers to do the dirty work for them. In the process, they mark up the prices to you and often charge you intermediary fees which will only make you noncompetitive.

      2. They tend to be overused by start ups who do not know how to carry out research beforehand. Start ups of that kind tend to be disorganized, and willing to accept very low margins, often even lower than their costs. It is only when they come to do their accounting that they realize they had been selling at a loss all along. Therefore it becomes impossible to build a business when this type of competitors are involved. In short, if a drop shipper can be found easily, or if it is easy to deal with them by just paying a fee, you should strongly consider avoiding them.

      Once you have established a trading agreement with a true drop shipper, the next step is to follow common sense market research, marketing and CRM principles. For example:

      1. Identify profitable niches before you look for suppliers. If you concentrate on a specific market and sell only closely related products then your chances of growing into an established business will be much higher. If you become a specialist in your product range, then your customers will acknowledge you as a professional and become loyal to your business. Have a look at the following threads to read more about niche markets:

      - https://www.wholesaleforum.com/discu...ll-about-1651/
      - https://www.wholesaleforum.com/discu...markets-16543/
      - https://www.wholesaleforum.com/discu...products-1437/

      2. Stand out from the crowd by providing quality product pictures instead of stock photos, and by writing more informational descriptions compared to those that have been written by your competitors. You should also research what competing sellers are doing, and not doing, to sell their products so that you can be one step ahead. if you are selling on eBay, Terapeak is the perfect tool to do just that,

      3. Beware of the extra costs, and have contingency plans for the most common issues. For example, under the UK's Distance Selling Regulations you are responsible for accepting your customers returns. This includes damaged products. Your drop shipper may not accept returns, therefore ensure you have someone who can repair returns or to whom you can offload returns to at minimal or no loss to you.

      Further, you may run into issues like PayPal holding your funds for 21 days because they consider you an undefined risk account; make sure you have sufficient funds set aside to counter any contingencies.

      Also remember that you are not in control of your own stock, and therefore of the promptness with which the orders are dispatched to your customers; this, in turn, means that your customers' perception of your service is almost entirely in the hands of the drop shipper you choose to use, unless you hold some stock yourself to remedy when products suddenly run out of stock, or shipping is delayed. For these and other reasons, carefully evaluate every drop shipper you are interested in working with, and make sure that margins will leave room for a good profit.

      To read more about drop shipping, finding and verifying drop ship suppliers you should have a look at the following threads:

      - https://www.wholesaleforum.com/discu...instantly-105/
      - https://www.wholesaleforum.com/discu...p-shipper-126/
      - https://www.wholesaleforum.com/discu...es-pitch-1436/
      - https://www.wholesaleforum.com/discu...-sources-1467/
      - https://www.wholesaleforum.com/discu...-seller-15048/

      Hope this helps
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