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Dropship
Your Way to Ebay Success
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by:
Tim Knox
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Dropshipping
is a topic that I first addressed in my column way back in April, 2003,
which is decades ago in Internet years. But with the continuing growth
of eBay and it's positioning of itself as a viable way for anyone
looking to launch an ebusiness, the topic of dropshipping is now hotter
than ever. It is also now more misunderstood than ever.
Dropshipping has been around since Sears first started selling goods
from its mail order catalogs over a hundred years ago. However, the
idea of dropshipping still confuses many people who don't understand
exactly how the process works.
By definition, dropshipping is a method of selling and distributing
goods wherein the distributor or supplier of the product (the
dropshipper) ships the product directly to the end user (your customer)
on the retailer's behalf (that's you).
The process of dropshipping involves three parties who take a product
from manufacturing to market. They are a manufacturer, a distributor,
and a reseller.
Let's use a blue widget as a sample product to demonstrate the process:
* Blue Widget Manufacturing (manufacturer): This is the company that
manufactures blue widgets. Blue Widget Manufacturing does not sell
directly to the public or supply the retailers who ultimately sell the
blue widgets to the end user. They prefer to use distributors to handle
the task of taking their blue widgets to market. Blue Widgets sells
blue widgets by the truckload to distributors who pay $5 per blue
widget.
* A1 Distributing (distributor/dropshipper): A1 Distributing is the
company that purchases blue widgets in bulk from the manufacturer and
supplies them to resellers at a cost of $7 each. The distributor does
not ship blue widgets to the reseller, but ships orders directly to the
reseller's customers as the widgets are sold.
* Big Bob's eBay Widget Store: Big Bob sells blue widgets to the public
from his eBay store. Bob orders the blue widgets from A1 Distributing
as he sells them (usually one at a time) and has A1 ship the blue
widget directly to his customer. Bob sells blue widgets to the public
for $10 each, which means that for every blue widget sold he nets $3.
How The Process of Dropshipping Works
Here are the seven steps involved in starting a dropship ebusiness:
* STEP 1: Choose A Product To Sell The very first step in any sales
process is deciding what product to sell. There are many factors that
should be considered before deciding on a product to sell, but for now
let's say that you decide to sell CD players on eBay.
* STEP 2: Locate A Supplier Who Will Dropship For You Using a research
tool like Google, Thomas Register, or an industry-specific resource
like The Ultimate eBay Dropship Power Pak. You search for and find a
company who will dropship CD players for you. The company offers you a
35% mark up over cost, which means that they will supply the CD players
to you for $100 each and you should be able to retail them for $135.
You make sure that the dropshipper has a good stock of CD players on
hand so you don't end up selling a product that must be back-ordered.
* STEP 3: Set Up An Account With The Dropshipper You contact the
company that can supply the CD players and set up a reseller account
with them. This can often be done online or by phone, but some
companies will require that you complete and return a reseller
application to open an account. Some companies may also require a tax
ID and business license.
* STEP 4: Advertise The Product For Sale On eBay Now that you have your
supplier lined up and know that the product is in stock, it's time to
make a sale. You advertise the product using an eBay auction. Since you
know what you must pay the dropshipper for the product, you know what
the minimum amount you will take for the product. In this case you
start your auction at $100 since that is your cost. If you are
confident that you can get more than $100 for the product you can start
with a lower price, but remember that if the product goes for less than
what it costs you to fill the order, you will lose money. Also remember
that the dropshipper will charge shipping, so you should figure that
into your sale.
* STEP 5: The Product Sells Great news: your CD player sells for $135
and your customer pays you with a PayPal instant payment. I highly
recommend that if you are selling on eBay you use PayPal or some other
online processor to accept instant payments. This allows the customer
to pay you faster, which lets you place the order with the dropshipper
faster, which gets the product to your customer faster.
* STEP 6: Place The Order With The Dropshipper After your customer pays
you, you should contact the dropshipper immediately to order the
product on your customer's behalf. The dropshipper then ships the order
to your customer under your company name and address.
* STEP 7: Follow Up After The Sale This is where many new ebusiness
people drop the ball. Just because your customer has paid you and
you've placed the order with the dropshipper does not mean that you are
out of the loop. Quite the contrary, if there are problems with the
order you are the one that will be held responsible in the eyes of your
customer.
Be proactive in your customer relations. Follow up with your customer
to let them know that the item has been shipped. Offer yourself as the
personal contact for any
Many people are afraid to use dropshipping as a method of sales due to
the horror stories that fill the Internet about unscrupulous
dropshippers who take the money and don't fill the orders, merchandise
that is eternally back ordered, unscrupulous middle men posing as
dropshippers, etc. Make no mistake, the dropshipping industry - like
most other industries - does have its share of shady characters who
would rob you blind given the chance, but there are also hundreds of
honest dropshippers who can help you build a profitable eBay dropship
business.
About the Author
DropshipWholesale.net, an online organization
dedicated to the success of online and eBay entrepreneurs. http://www.dropshipwholesale.net
- http://www.30dayblueprint.com
- http://www.prosperityandprofits.com
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