Cut Start Up Costs By Using A Dropshipper

QUESTION:

I want to start an online specialty shop, selling gifts and home accessories. I want to be able to have items dropshipped to customers through my site. I already have a website and domain name reserved, but I don’t have a lot of money to get this going. I’d appreciate whatever insight you can give me. — Mary Ellen Y.

 

ANSWER:

Mary Ellen, consider setting up relationships with companies who will ship merchandise directly to your customers for you – dropshippers, as they’re called – is an excellent way to start your e-business and, if done properly, doesn’t have to be a costly endeavor.

There are literally hundreds of companies out there that will dropship products for you, everything from gifts and housewares, to leather goods and jewelry, to power tools and furniture, and on and on. Your goal should be to find one or more reputable companies to supply your goods.

In a nutshell, here’s how dropshipping works.

  • You set up an account with a dropshipper (or multiple dropshippers who offer different kinds of products) who provides merchandise that you can sell on your website.
  • The dropshipper typically supplies you with images and product descriptions that you can use to build your online store or feature on static web pages.
  • When a customer places an order for the product on your site, they pay you for the product. You, in turn, place the order with the dropshipper and pay them for the product. The dropshipper ships the item directly to your customer under your company name.
  • To your customer’s knowledge, the product was shipped by you.Dropshipping offers many advantages to the shoestring online startup. You don’t have to pay for an item until it sells and your customer pays you, so your personal cash outlay for the product is zero.

    You don’t have to handle or warehouse the merchandise as order fulfillment is handled by the dropshipper. You can also offer a wide variety of items from multiple dropshippers and your end customer is none the wiser.

    Dropshipping does have it’s downside. Since you do not actually stock the products featured on your site, you have no control over inventory management, product availability, order fulfillment, shipping processes, etc.

    Still, if you do your homework and establish a good relationship with a reputable dropshipper the problems you experience should be few.

    Your goal should be to find a dropshipper that will dropship items one at a time instead of requiring that you purchase a fixed minimum number of items each time (single unit purchases versus minimum order purchases). With this arrangement you don’t have to invest your limited cash reserves in inventory that might not sell (and sit in your garage for months).

Thanks to the stiff competition the Web has created, many dropshippers will now do business with you without requiring that you pay a setup fee or have a tax ID number. You simply set up a reseller account (you’re the reseller) and start marketing the products on your site.

Account registration can often be done online at the dropshipper’s website. With this process, you can literally be selling products within minutes of setting up your reseller account.

Be warned, however, that some dropshippers are not as reliable as others. Also, be aware that some companies who claim to be dropshippers are really middle men who have positioned themselves between the online merchant (that’s you) and the real wholesale merchandise distributor.

These middle men will eat into your profits and usually don’t offer much in the way of customer support and service. They can actually hurt your business more than help it, so make it a point to do business only with – and directly with – established, reputable dropship companies.

Spend the time to research the dropshippers doing business in your particular product category and try to get feedback from their current customers.

The most important thing to remember about dropshipping is that your customer doesn’t know (or care) that the product they are purchasing from you really comes from a dropshipper.

However, if there is a problem with their order your customer will come back to you for resolution, not the dropshipper, so make sure that any dropshipper you use has a track record for resolving problems quickly.

Career Advice, ENTREPRENEUR, INVESTING IN YOUR CAREER

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