Friday, November 5, 2010

Finding a Drop Shipper

Drop shipping is a Supply Company technique in which the retailer (You) does not keep goods in stock, but instead the customer place the order with you and pay for the item. After payment is received you then forward that order to the drop ship company your working with and they will process the order for you. You never keep any goods in your home and you wont need a warehouse to store the items either.

As in all retail businesses, the retailers (You) make their profit on the difference between the wholesale and retail price. For example say if you have a store or you want to post an item for sale on eBay. The drop ship company will charge you for a certain item $22.00. This is the price you have to pay after the sale is made. You list the item for $32.00 and it sells. As a result you will keep the difference of $10.00. Now I know that doesn't sound like a lot, especially when you add the eBay fees or monthly price for your website. But what is that happens 100 times that month, and with the traffic eBay gets that's can very well happen. You just earned $1000 bucks minus the cost for your website or eBay fees you have a very good profit.

There are a few things however you should stay aware of, and that's "The Middle Man" The Middle Man is someone who wants to pretend he is a true drop Shipping company be he really isn't The internet have many different websites claiming to be a dropship company but the truth is they are just MIDDLE MEN.

Drop Ship Companies will not charge you to use their services. Why would they need to? They make money when you sell their merchandise after they sell it to you wholesale. Since a wholesale company have plenty of retailers (you) buying from them, they don't need to charge anything. Real Drop Ship companies have to use you for tax purposes. That means you need something called a Tax ID or an EIN which is an Employer ID Number. In other words if you are required to collect sale taxes then you need a Federal Tax ID Number. Now if your working with a drop Ship company that doesn't ask for this at all, and just sign up with them to start selling their items, then they are not a REAL Drop Shipping company.

Lets do an example: You sign up with what you think is a drop ship company and you start selling their items. You see a hat you want to sell and the price listed from the drop shipper is $19.00 bucks. You try to sell that item, but after doing research you see people are selling the same hat for only $11.00. now some people could just have the hat in their house and set their own price, but what about everyone else?

How could they ever sell that same hat for $11.00 when you HAVE to sell it for at least $19.00 (which means no profit for you) and you have to sell it for even more than that just to make a profit. The odds of anyone buying that hat from you at a higher price, when they can easily get that same hat for much cheaper from anyone else are very low. As a result you just paid the "Middle Man" maybe $10 or more to join their site and unable to make a profit. You just lost money and they gained it.

Please avoid Drop ship mailing List - they are nothing but a scam and a waste of your time and money. A Good Source of Drop shipping Company is World Wide Brands. Although they do not have things like Ipods and computers for drop shipping, they do have lingerie, auto parts, sporting goods, beauty products etc that uses REAL Drop Shippers.

I Must say some companies listed with them are questionable when it comes down to their "high prices" which means a harder profit margin for you. However most of them are pretty fair and also do not charge you a Drop ship fee for each order you process. That drop ship fee can be $1 to $5 per order, which simply eats away at your profits.

To become a member of the site is kind of costly, about $299.00 for a Life Time Membership which can be broken down in to monthly installments. If you decide to join you will be able to find a REAL Drop Shipper, and Lots of additional features to help you make a smart decision about the items you should sell to make the most profit.

No comments: