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What is Drop Shipping?

What is Drop Shipping & why people use it?

In today's world, many people try to operate a profitable business by using the internet. It is much simpler to have a virtual storefront than to have a brick and mortar store. In addition, it is much cheaper to operate.  One of the major reasons that the cost of operation is minimal is due to the process known as drop shipping.

Drop shipping seems to be a magical way of getting merchandise, selling the merchandise, delivering the merchandise, while not visibly seeing the merchandise. This may sound a bit complicated but actually, it is very simple.  To use an example let us use the Dutch Maid Manufacturer of cleansers. Dutch Maid makes a lot of product but they are not in the business to sell or distribute the product.  The next group let us introduce is Mr. Distributor who is the person who goes to the Dutch Maid Manufacturer and contracts to buy the product by the case at a dollar a can or $12 a case.  The Manufacturer declares that it cost him .50cents a can to make, so there is a $6 a case profit.  The Manufacturer is happy because he has profited without having to try to sell or advertise which has greatly saved on the company's profit margin.

Let us take this a step forward, as Mr. Distributor now needs to sell the product in one of two ways, which are by soliciting retail stores and having them agree to buy the product or by opening up a website where Mr. Distributor can take orders and sell on line.  In both cases, the process of drop shipping plays a vital part in Mr. Distributor business. First Mr. Distributor now has a good product for resale but does not have to keep it stored nor does he have to open up a storefront to display the product.  He is using the drop shipping method simply put the retail stores order from him and he sends the order to the Dutch Maid Manufacturer who sends the product to the customer. This is why the use of drop shipping is the best way to run a business without too much investment.

This sounds like a sure fire way to make money without loosing a truly profit making opportunity.  Unfortunately, success stories are rare as those who venture into this line of business balk under the adverse and challenging realities of the competitive medium.  The primary reason for these unfortunate cases is not in the business plan or the lack of commitment on the part of those behind the idea, but rather it is inadequate and unreliable information. Most entrepreneurs fail because they did not locate genuine and legitimate wholesale and drop shipping companies.  The other reason being the drop shippers is not supplying the kind of niche goods that actually generate not only high number of sales but extremely high profits as well. The use of a good drop shipper is one of the most vital aspects of a distributors business.

For many years businesses have use dropshipping as a means to move merchandise to customers.  It has become very popular especially with small business.  It is one of the tools that business uses to enlarge the staff and to enhance the service.  It also saves overhead expenses it saves gas and it saves time.

It just makes good sense if you are selling online, and especially if you are the only in your business, to use a drop shipper.  When you use a drop shipper you have a larger inventory to offer your customers.  Most companies do not have large warehouses to store merchandise even more so most companies cannot afford to rent or own a large storage facility.  Many companies operate from one room in the home and use drop shipping to extend the company facilities. It is a very simple process if you want to use a drop shipper to help you move your merchandise.  Some businesses have become a success because they have used dropshipping to enhance their business.  When you are using drop shipping as a means to move your merchandise or to send orders you really don't have to leave your home.

All can be done from your computer or even a mail order catalog.  Most homes today have computers and use them to sell merchandise online.  All you have to do is send the wholesale cost of the merchandise to your drop shipper and the name and address of your customer and the dropshipping company will send your merchandise right to your customer's door. This saves you a lot of time because you don't have to address labels you don’t have to wrap packages and then go to the post office.  You may stay at home and do all of this from your desk. 

It is much more convenient to dropship when you are getting your merchandise from the same company that is doing the dropshipping. Check with your drop shipper and become very familiar with the rules and regulations of the company. In many instances you can save money if you order larger quantities of goods from the company.  This sometimes depends on whether you are dropshipping retail or whether you are dropshipping wholesale. There are many companies who sell both retail and wholesale and will dropship for both.  Perhaps the most important thing you need to know before you start dropshipping is policies of the company.

The company policies will let you know what you can do and what you can not do.  One thing you need to consider is what you will do with the merchandise if it is returned.  Some dropship companies will not allow you to return merchandise.  Some companies who offer to do dropshipping will sale return merchandise locally.  Don't forget to check out the dropshipper’s reputation; in addition find out how long the company has been in business.  When a company has been in business for a while you will know it by the way he does business.  If you are in doubt about a company you are considering you can check with the Better Business Bureau.

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