Wholesale Drop Shipping - A Genuine Business Opportunity?
If you have been looking for ways to start an online business cheaply, then the chances are you have come across wholesale drop shipping. However, you may be wondering whether this is a legitimate business opportunity or simply another scheme designed to make a few quick pounds for people with questionable ethics, whilst you are left still searching for a way to start your own business at home.
Firstly, let’s clarify what drop shipping is; a drop ship company sells products at wholesale price but allows you to buy individual units and crucially, they will deliver the item to your customer on your behalf. This gives you access to goods at wholesale price but without having to spend money on stock until you have buyers. With a wholesale drop ship company you simply market the product you would like to sell and purchase the items as and when you make a sale, having it delivered directly to your customer.
On the surface this idea looks too good to be true. Why would a company allow you to sell their products without actually making a purchase? Why would they pay to store the products and then offer them to you at wholesale prices?
Well, the answer is simple; offering drop shipping services as well as, or instead of a standard wholesale service gives smart wholesale companies the opportunity to sell more products. By offering a drop shipping option they instantly make their business appeal to a much wider market - think about how many people are out there looking to start a business from home, with very little financial commitment; many people who could never afford to buy wholesale stock, or would not be willing to take the risk of investing in stock they may or may not be able to sell on suddenly see online retailing as a viable business idea if they have a chance to make money without any upfront financial commitment.
So, whilst there may be extra running costs for a wholesale company that offers drop shipping, it is greatly outweighed by the benefit of an additional income stream. The profit margin of drop shipping may be smaller than of simply selling wholesale, but the market is bigger, so less becomes more.
Now the next important question to ask is whether drop shipping can provide a stable and sustainable basis for an online or home based business. We’ve established that drop shipping is a genuine business concept but we need to know that it works in practice. For drop shipping to enable you to build an online business the drop ship company to meet certain basic criteria.
Firstly, the wholesale drop shipper needs to offer a decent selection of items at competitive wholesale prices. The online retail market is extremely competitive and your online business will never get off the ground at all if you cannot source products at a good rate. They also need to have a reliable stock; if their merchandise runs out every other day you will never get anywhere.
Secondly, and probably most crucially, they need to provide a good level of service; there’s no point putting all your effort into making sales if your drop shipper has a poor delivery service, or worse still provide faulty merchandise. Building a profitable business with drop shipping is dependent on the reliability and professionalism of the drop ship company you choose. You can do everything right, create the perfect sales pitch and make hundreds of sales but if they run out of stock, without updating you promptly or fail to deliver the goods to your customer in a timely and professional manner you will go out of business quicker than I can type the words.
Any retail business is built on customer service and the major downfall of drop shipping is that the most important part of the online sales process is out of your control, you are completely at the mercy of the wholesale drop ship company you choose to work with. Repeat business is one of the main ways to build a business quickly but poor after sales will kill any chance of customer loyalty. Worse still, if you choose to sell via eBay, which is one of the best places to start an online retail business, negative feedback from past customers will put off any potential new buyers.
So the pitfalls of working with a drop ship distributor are clear but this doesn’t necessarily mean that drop shipping is something to steer clear of, what you must do is choose your drop ship partner carefully. As with most home based business opportunities there are plenty of people out there simply looking to rip you off. But, if you are cautious you can avoid the scams and make a success of selling online with drop shipping.
When you are looking for a reliable drop ship company be wary of those companies or wholesale supplier directories that ask for a fee. Some of these companies are legitimate and it is not necessarily unreasonable to charge a membership fee but be particularly wary about any companies requesting a monthly fee. Take your time, research your options and the more trustworthy companies will stand out.
The next stage of selecting your wholesale drop shipper is to look at their stock. At this point it is very important to research your market. Say, for example you are looking to sell via eBay, you need to look at your potential competition - to start a successful business you have to be able to match their prices. Check out what is selling and for how much, look at completed sales as well to see what is popular and what prices you could hope to achieve. Can the wholesale supplier you are considering offer you low enough prices? Do they stock in demand items?
Finally you need to test their customer service. Email them with a few questions; how quickly and helpfully they respond is a good indication of their general attitude towards customer service. You could even go as far as to run some test purchases, order an item or two and see how well they manage the delivery process - are the goods well packaged, arriving in good condition; do they arrive promptly?
Perhaps this sounds like a lot of work and that there are a lot of potential problems with drop shipping but this need not put you off. There are decent companies out there and if you do your home work you can build a successful business. For more advice and tips on finding a reputable wholesale drop ship company visit www.auctionbiz.co.uk. As with any new venture there is a lot to learn but if you put the effort in, the rewards can be great.
