Dropshipping – How does it work and how can I make money with it
March 1, 2010
This is a very important question many entrepreneurs looking for opportunity to make money online would like honest and open answer to. I am going to take you through the main tasks involved in getting you to make money with dropshipping and share with you my own personal experience in the journey of exploring dropshipping opportunities.
I am going to give it to you as it is in the real world, no fluff. I have tested everything I am sharing with you because I want to be absolutely certain about the reliability of the information I share with my students and readers alike. Most of what I know I learned directly from experience not just from reading books. I have had ups and downs in the journey, as you will imagine, but I am extremely pleased that I am now clear about what works and what does not work.
If you are not familiar with the concept of dropshipping let me explain it before proceeding. Dropshipping is an arrangement whereby you sell products that are directly held in the inventory of the suppliers and distributed to your customers directly by the suppliers on your behalf. For the novice, this can be a complex concept because it is a reverse of what is the norm. It is normal practice to buy products, stock them and sell directly to customers. Many entrepreneurs relate to this as a way of doing business but find dropshipping as a way of doing business a minefield.
Typical questions that have been asked of me are:
1. How do I get paid for the products
2. How do I know the products I am selling is in stock
3. How much money can I make and what are the risks
All these questions can be addressed when you sign up for our free mini-dropshipping course. Of course there are pros and cons with dropshipping and as a savvy entrepreneur it is down to you to learn how to circumvent the risks and optimise the benefits.
Making money with dropshippers involves taking a number of steps. Each step is important and must be given due attention. To begin with you have to:
o Source the right products you want to sell.
Many naïve entrepreneurs in desperation will start selling products missing this vital step. Products for which the demand is weak on the internet are not likely to make you money irrespective of how cheap you can get them from the dropshippers. The higher the demand, the more likely you are to succeed with the products, all other things remaining constant.
You have to understand the needs and want of your target market by carrying out research. If you jump into a business without sufficient research you will soon learn that your business is really the research. That in itself may not be a bad thing but remember you are putting your time and money at an unacceptable risk taking this approach. Entrepreneurialism does involve taking risks but some element of responsible and managed risks may be called for because your time and money are assets you don’t want to put to waste.
As a result, the first key asset you need to succeed through dropshipping is a mechanism of sourcing products from reliable dropshippers. I want to put it to you blatantly that many of the list you will find in Google directory is unreliable. The biggest risk you will find is that dropshippers will not deliver the item on time at best or at all leaving you expose to criticism from the customers and in some case with a bill to refund customers money.
To learn more about this, you will do well to sign up for our mini course on www.businessstartupuni.com . All that you need to know you will learn for free from this course. If you don’t have time for mini-course you can access a list of reliable dropshippers today from www.businessservicessupport.com/dropshipping
Join my forum today and ask question. Meet Sheila at the free forum and learn about what she is up to. It is free. You can also trial my online business startup coaching risk free for 30days.
Sheila Elliott is an expert in business and personal development strategies. She is the founder of Business Services Support Limited and the author of My Business Is My Business- Learn How To Earn A Fortune. For more information about our free articles visit, http://www.businessservicessupport.com
Dropshipping – How to start a business with dropshippers- Part Two
In this article, I am going to continue sharing with you some of the steps you need to take to do business successfully with dropshippers. In part one, I mentioned that having a network of dropshippers that are pre-qualified and reliable is critical for success. Also important is for you to be able to get hold of the products required to satisfy your target market’s needs and want. We will now look at other factors you must carefully consider when planning on doing business with dropshippers. The main points are:
o Check the competition on the products you want to sell
Selling online does not defy the laws of economics. If there is a high demand for a product and the supply of the product is equally high, the price at which you can sell will be low. So you need to check the competition; how strong or weak it is. Will you be one of few online retailers selling the product or will you be one of millions selling it. You can access a free tool today to find out more about your market’s competition. Simply scroll to the end of this article.
o Determine how the online retail price will compare to the price you can order the product for from the dropshipper.
This is so crucial. If the margin is not strong you are unlikely to make profit after deducting your purchasing costs, selling and overhead expenses as well as tax.
o Check the reliability of the dropshipper
How reliable is there business model and how long have they been in business. What is the quality of the product and what is the perception of the market about the dropshipper. How fast do they process orders and what are the consequences for late delivery or frequent mistakes in delivery. You need to get answers to these questions. You can also go to www.businessstartupuni.com and sign up for our mini course if you have not done so already.
o Open an account with reliable dropshippers
There is no guarantee an account will be opened for you. Some dropshippers have very strict policies on who they will work with. You may need to formally apply to become a partner with a dropshipping company and usually provide more information about your business. Having a website is usually important and if you have not got one set up to date, you will find our recommended suppliers who can help you out on my blog site.
o Once your account has been approved and activated, you can then have access to the price you can order the products for.
Ensure you do your maths well. If you don’t, you are taking a big risk. If you are planning on selling these products on EBay make sure you calculate EBay’s fees and PayPal fees in your assessment of the viability of the business. Also, do remember that a dropshipper may not be able to fulfil all your orders and so contravening auction rules due to late delivery may carry a hefty penalty for your business in terms of feedback from buyers. I always advice that entrepreneurs don’t sell products that are dropshipped on EBay or any auction site unless you have total confidence of the deliverability capacity of the dropshippers .
Put an ecommerce website together.
I will be writing another article on the subject of how to put together your website and how to manage risks associate with the process at some point soon, for now I will cover the basics on what you need for your dropshipping business. Your ecommerce website need not cost you a fortune. Your ecommerce website is nothing more than a shop online. It does not earn you sales automatically. You will need to do marketing at different levels if you are to see your business generating sales. On this site you will find our recommended ecommerce providers, host service providers and more. My company also work in partnership with an Oscommerce expert web designer that offers an off the shelve e-commerce website that comes with a shopping cart for as low as £150 plus VAT and the site is also SEO friendly. You will need to pay for your logo and graphic design and any merchant account integration. It is perfect for start-up that doesn’t have too much money to invest on website.
o Promote your products using internet marketing strategies and direct marketing strategies
Driving targeted market to your site is critical for the success of your business. To do this, you need the support of companies that have reliable tools that you can draw upon. Watch out for my marketing tips article. Subscribe to my blog site if you really need more assistance.
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