About Drop Shipping
Drop shipping has become one of the new ways to make money online. The process of drop shipping works in a few simple steps:
Step 1: Contact a company that offers drop shipping services and has goods that you would like to sell.
Step 2: Set up an account with the company.
Step 3: Get photos and descriptions of the items that you have selected from the drop shipping company.
Step 4: You sell the products on your website, on eBay, or any online method you choose.
Step 5: Once you make a sale and the buyer pays for the product, you pay the shipping company the amount you agreed upon and keep any profits.
Step 6: The shipping company delivers the product directly to the buyer.
From these six steps, drop shipping looks like an easy way of making money; however, it has there are pros and cons.
Most businesses require an individual to have money saved to start up. This is mostly because you need to pay for the products before you can start selling them; however, with drop shipping you don’t have to have any money saved. You can easily start this business with very little or even no cash at all. The only time you pay for a product is after a sale has been made and you have received money from a buyer.
For most people, the whole process of packing and shipping products to the buyer can be an inconvenience. With drop shipping, the whole process is left for the shipping company to handle. This business is also convenient because you can try out a few products to test the waters and see whether you are making any profits. If the business doesn’t seem to pick up, then you can leave it without making any losses.
No Storage Required
Most people who physically handle the goods they sell must make sure they have enough room in their home to keep all the products; however, in drop shipping you don’t handle any of the products, so you don’t need to worry about storage.
Free Product Testing
When a new product is launched, you can test it without incurring any losses. The fact that you have not purchased the goods before selling them means you incur no losses whether a product is bought or not. If the market does not respond positively to a new product, you just stop offering it to them without making any losses. The hassle of returning products and dealing with shipping issues isn’t a concern.
ConsLack of Control
As a business person it is important to ensure the goods you send to your customers are of good quality and that they arrive on time; however, drop shipping doesn’t offer you that control. You buy and sell products without knowing exactly what you are sending to your customer. If you deal with an unreliable company, your customers may be receiving poor quality products or delivery might be delayed.
Although you are not in control of the whole product or its shipping, you will be the one receiving the blame. Dissatisfied customers will contact you complaining about the products, and you may even have to refund them.
The shipping companies carry all the risk when it comes to drop shipping, so the goods they sell are usually priced a few dollars higher than the goods sold in wholesale. This means that competing sellers who bought the goods in wholesale will be able to offer customers better prices than you. If you are selling common products, this could be a serious issue that you may have to deal with. Most people who make good money from drop shipping have specialised in selling unique items.
Backorders mean you’re doing business, but there is the downside, too. You might sell a product to a client only to find the suppliers has run out of stock. This puts you in the awkward situation of telling your client to either cancel the order or wait for a few weeks until the next stock arrives. To eliminate this problem, it is advisable to invest in a company that has a proper inventory system that keeps you updated. Know what’s available before you sell and always leave a little cushion room.