The path to drop-shipping success is riddled with many challenges. Over 95% of start-ups in this business do not make it past their first year. Beginners love the ease and convenience of drop-shipping, which includes no inventory, no outdated stocks, and the freedom to specialize in as many niches as you prefer. In addition to these advantages, drop-shipping is a perfect work-from-home business, allowing you to set your own schedule and be your own boss.

However, you need to follow certain guidelines if you want to avoid becoming yet another statistic among thousands of failed drop-ship businesses. The hype surrounding the business makes people believe that drop-shipping requires zero investment and provides unrealistically quick returns. The successful seller is willing to learn the ropes and work on building the business. This is not a get-rich-quick scheme.

Market Research

All serious attempts at creating start-ups require you to assess the market and find out which products are in demand. You can start by studying the most popular items on eBay and Amazon. Go through wholesale forum to find out what people are discussing, and get a few hints on what to sell. Identify your own preferences: technical, cosmetics, fashion, collections, or electronics. But also account for competition: high demand + high competition means lower returns for you due to high price competition. Find a niche within your preferred market, and identify in demand products that have few sellers fulfilling it.

Also, no business is complete without a business plan. A business plan often differentiates the successful seller from the failed drop-ship aspirant. Creating a business plan may look difficult, but it is an essential part of any successful venture. The plan includes investment estimates, sales strategies, and supplier projections.

Finding Suppliers

Next, see if the products you short-listed can be acquired through suppliers. Unless you have a supply of products, you cannot sell them. Good suppliers are unfortunately few and far between. Many wholesalers do not want to get involved in drop-shipping. Other suppliers charge exorbitantly, often exceeding the retail value of the product. If manufacturers do not deal directly with wholesalers, they may direct you to local distributors. Therefore, approach manufacturers directly if you cannot find a supplier for a preferred product.

Sometimes, you have to create your own supply lines. Small manufacturers or distributors are often unaware of the concept of drop-shipping. Don’t ignore them. If you explain how you can have a mutually beneficial business arrangement, they may allow you to sell products for them.

Drop-shipping scams can ruin businesses. Do not deal with suppliers you don’t find trustworthy. If possible, insist on sampling the product before placing orders. Be very careful not to invest in items that are not genuine. Discuss issues such as shipping charges, seller commissions, and return policies.

In a drop-ship enterprise, a lot depends on the relationship between the supplier and seller. This is all the more important considering there are very few reliable sellers who offer quality products at wholesale prices. Some unethical wholesalers demand fees to work with sellers; always look for sellers who do not charge anything.

How Much to Invest

You can start a business with zero investment, particularly a home-based, online business. However, building your business quickly is easier if you opt for certain paid services, such as website development and online advertising. Spend your money wisely. Don’t buy kits that promise drop-shipping nirvana by setting up your business in 24 hours and getting you the first $2000 in 3 days.

A big debate on wholesale forum centers is on the relevance of paid drop-ship directories. A paid directory is good only if it gives you access to existing suppliers and their contact details. Many directories are months, even years, old. Therefore, you lose money by purchasing the directory. Some drop-ship directories are available free of cost, and there is no harm in trying them. Some are extremely good and can cut down on your sourcing time significantly, especially because they warn you against low profit drop shippers and because they exclude scam drop shippers. Try Worldwidebrands and eSources for immediate results.

Setting Up an Online Store

An eBay, Yahoo!, or Amazon store is very easy to set up. In the initial stages, you do not have to build an e-commerce website dedicated to your products. A blog (try free blog platforms such as Blogger, WordPress, or TypePad) is a great way of keeping in touch with customers. A regularly updated blog assures them that you are the master of your niche and you have been in business for a while.

Unlike most concrete retail stores, online stores have two functions: selling as well as promotion. When you advertise your business through blogs, articles, social networking websites, or newspaper advertisements, you will direct people to your site. This is why an attractive storefront (or layout) with plenty of information on the products on sale is important.

To summarize, most auction sites have easy-to-use features. You do not have to be a programmer to set up an online account with them. Good product descriptions and positive feedback from customers is essential for building a strong business. If you go the website route, you can have a hosted solution through sites like, get one free with eSources, or develop a custom website by hiring the services of professionals on

Sales and Promotion

The Internet is thick with advertising platforms, paid and free. Many people use social networks such as Facebook and Twitter to promote products. Build online communities, participate in forums, or comment on blogs of other industry insiders. And, leave a link to your website on each of these forums.

Using paid advertising is another way to draw customers. Facebook, Google, and many blogs run programs that allow small businesses to capture relevant customer base information at minimal cost. How much you pay for advertising depends on the product. Some keywords cost as little as $0.01 per click; others command prices as high as $6 a click.

No matter how large or small your business, customer service should be your first priority. A happy customer is the best publicity. Positive customer feedback on eBay, for example, can spell the difference between a tepid and hot start-up on the Internet. Answer e-mails as soon as possible, provide descriptive product information, and act on fair return requests promptly.

Follow these guidelines, and find yourself on the road to riches (or at least an extra income) in a few months.