How To Start a Drop Shipping Business

Many people shy away from starting an online

store because of the initial start-up costs.

But imagine if someone offered to pay your

up-front inventory costs on thousands of items

and manage all your shipping and fulfillment

operations for you. It'd be much easier to

get started, and you could run your business

from anywhere in the world.

Sound too good to be true? Well, it's not,

if you know about dropshipping.

In this post, I'm going to explain exactly

how drop shipping works, show you how to find

drop shippers for your products, and give

solutions to some common problems associated

with drop shipping.

And if you stick around until the end of this

video, you’ll get access to “The Ultimate

Guide to Dropshipping” a free bonus guide

that shows you exactly how to start a dropshipping

business. Alright, let’s dive in.

What is drop shipping? Well, drop shipping

is a retail method in which you don't keep

products in stock. Instead, you partner with

a wholesale supplier that stocks its own inventory

- you transfer customer orders and shipment

details to them, and they ship the goods directly

to the customer.

The biggest benefit of drop shipping is you

don't have to worry about fulfillment or inventory

issues. Also, most customers don't know you're

drop shipping, since "private label shipping"

lets you ship from the wholesaler with a return

address and invoice customized to your eCommerce

store. Let’s quickly go over a few other

benefits of drop shipping.

One - You don’t need buckets of money. Drop

shipping makes it amazingly easy to get started

selling online. You don't need to invest heavily

in inventory, yet you can still offer thousands

of items to your customers.

Two - Convenience and efficiency. Successfully

launching and growing an eCommerce business

takes a lot of work, especially if you have

limited resources. Not having to worry about

fulfillment is incredibly convenient and frees

up your time to concentrate on marketing,

customer service, and operations

Three - Mobility - with all the physical fulfillment

issues handled, you're free to operate your

business anywhere you can get an internet

connection.

Four - It’s a trusted model. You might be

thinking that this sounds like some sketchy,

fly-by-night model – but it's not. Plenty

of online stores, and even major retailers

use drop shipping to offer a wider selection

of products to their customers without having

to deal with increased inventory hassles.

How do I find drop shipping wholesalers? Well,

first off, in the United States, most suppliers

will ask you for your business EIN number

and a copy of your state sales tax and/or

resale certificate. So you may want to consider

having your legal ducks in a row before contacting

suppliers. However, this isn’t always the

case and there’s no reason why you can’t

start contacting drop shipping suppliers immediately.

Now, if you already know what products you'd

like to drop ship, contacting the original

manufacturer is the easiest way to find qualified

distributors. Not all distributors will be

willing to drop ship, but it will give you

a list to follow up with.

Unfortunately, the market is littered with

scams and low-quality information. If you

do decide to invest in a directory, we recommend

the paid directory World Wide Brands as a

reputable source of drop shipping wholesalers

- but it's still very important to exercise

caution.

Additionally, if you’re using Shopify you

can access a variety of apps in our app store

that will connect you directly with reputable

dropshippers. I’ve linked to a few of these

in the description of this video.

How to use Google to find wholesalers. Google

can also be an effective tool for finding

drop shippers, but you need to keep a few

things in mind. Here are some tips you can

use to find a wholesaler through google.

The first thing you’ll want to do is Search

Extensively. Wholesalers and drop shippers

are notoriously bad at SEO and marketing,

and usually aren't going to pop up on the

first page of Google for a term like “handbag

wholesaler.” Instead, you'll need to dig

deep into the search results, often going

through 10 or 20 pages of listings.

Additionally, you should use lots of modifiers:

As you hunt for suppliers, don’t stop with

a search for “wholesale” - make sure to

use other terms, including “distributor”

, “reseller” , “bulk” , “warehouse”

and “supplier.”

It’s also important to note that suppliers

also tend to have outdated, late ‘90s-era

websites. So don't be scared away by abysmal

design and layout. While a sleek, modern site

could signal a great supplier, a low-quality

one doesn't necessarily indicate a bad one.

Now, despite our glowing recommendation, drop

shipping isn't eCommerce nirvana. Like all

models, it has its challenges and downsides,

which we’ll quickly go over now.

One - There will be loads of competition and

weaker margins. It's true. Products that can

be drop shipped will spawn a lot of competition.

Usually this will lead to cutthroat pricing

and diminishing profit margins, making it

hard to build a viable business.

To be successful, you typically can't compete

on price. Instead, you'll need to offer value

in a different way, usually through top-notch

product education, service or selection.

Two - syncing inventory is difficult and leads

to out-of-stock items. The best way to mitigate

this problem is to work with multiple suppliers

with overlapping product lines. It's inherently

dangerous to rely on a single supplier. Having

two suppliers doubles the likelihood that

an item will be in stock and available for

shipment.

Many sophisticated suppliers offer a real-time

product feed, and you can use a service like

eCommHub to easily sync your Shopify website

with the warehouse.

Eventually, you’ll sell a customer an out-of-stock

item. Instead of canceling the order, offer

the customer an upgraded product or discount.

You might not make much – if any – money

on the order, but you'll likely build a loyal

brand advocate.

Three - It’s hard to sell products that

you never see, however In today's world, it's

possible to become an expert in just about

everything through information online. Selling

products from manufacturers with detailed

websites will allow you to become intimately

familiar with a product line without ever

having touched a physical item. And when you

do need to answer specific question about

a product, a quick call to your supplier or

manufacturer will give you the answer you

need.

You can also buy your most popular items to

get acquainted with them, and then resell

them as “used” or “refurbished,” often

recouping most of your investment.

Four Third party errors. Involving a third

party will result in more fulfillment errors,

mistakes, and logistical problems. Even the

best dropshippers make occasional mistakes,

and mediocre ones make a lot of them. Suppliers

are fairly good about paying to remedy problems,

but when they're not, you need to be willing

to spend what's necessary to resolve the issue

for your customer.

If you try to blame your supplier for a fulfillment

problem, you're going to come off as amateurish

and unprofessional. Similarly, if you're unwilling

to ship out a cheap replacement part to a

customer because your supplier won't cover

the cost, your reputation is going to suffer.

One of the costs of drop shipping convenience

is the expense of remedying logistical problems.

If you accept it as the cost of doing business

– and always make sure to put your customer

first – it shouldn't be a long-term issue.

Is dropshipping the path to overnight eCommerce

success? Of course not. As with any successful

online store, you'll need to invest over time

in a quality website, marketing, and customer

service.

But drop shipping does provide an easy way

to get started and the ability to leverage

other people's capital without having to invest

thousands of your own. When managed correctly,

it can form the foundation of your own successful

online store.

If you’re looking to learn more about drop

shipping - check out our “Ultimate Guide

to Dropshipping” , a free comprehensive

guide that covers everything you need to know

about building and running a successful dropshipping business.