Make Money with Drop Shipping Companies
Many people are familiar with the business model of buying products from wholesale distributors and reselling them for profit. It's the basic model that all stores and shops operate on.
Now, before the advent of the Internet and online auction sites such as Ebay, anyone wishing to get into the reselling business needed to open their own store or shop and purchase inventory in bulk in order to benefit from wholesale pricing. All these up front costs made it very difficult and expensive for the average person to start up their own successful retail business.
However, these days it is easier than ever to start making money online. Especially by combining the power of the Internet with the convenience of wholesale drop shipping companies.
Drop shipping companies work by selling products at, or near wholesale prices to a reseller, and then shipping those products directly to any of the reseller's customers. Resellers using a drop shipping service generally don't have to worry about carrying inventory, dealing with shipping issues, or buying in bulk.They simply advertise their products, take the orders, collect payment, send the info and pay the drop shipper who will then send the product out to the customer straight from their warehouse.
Drop shipping is very widely used by many successful Ebay sellers, and is a great way to make money online. Since the seller doesn't have to purchase any stock in advance, it is possible to try out different markets and products with very little risk. Simply list the product on ebay, and only pay the drop shipping company after the customer has paid you!
As with most things in life though, there are a few draw-backs. One is that, since it can be so easy to get started as an online reseller using drop shipping, the increasing competition can drive down profits. Thus, it is very important to find and deal with only the best drop shipping companies offering the lowest prices.
Since there are so many drop shipping companies out there, finding the perfect one for the particular products you wish to promote can be a daunting task. There are also many scammers out there posing as drop shipping companies, trying to steal profits. Fortunately, there are plenty of good guides and resources around that can help anyone get off to a good start in this business.
Avoid the Middleman Companies
Being a "middleman" is a business model of putting yourself between a buyer and a seller, and charging a markup price for your service. In drop shipping, a middleman company often times poses as a legit drop shipping company themselves. Basically, the way they operate is:
- You sign up with them, believing them to be a legit drop shipping company.
- You begin advertising and selling their products.
- When a customer makes a purchase, you send the information and order to the middleman drop shipper.
- They, in turn, send the order information to the real drop shipper, and have it sent to your customer.
- You end up paying more due to the price markup the middleman company is charging.
- You lose profits that should be yours.
There are a few signs you can look for to determine whether or not you are dealing with a middleman wholesaler. The first is if they charge sign up fees and/or monthly fees. Real wholesale companies do not charge monthly fees.
Secondly, if they do not provide a full company name, phone number, or business address, they are likely a middleman.
Thirdly, a true wholesale company will ask you for a business licence and tax id.
Finding Suppliers
Instead, see if you can contact the manufacturer of the product(s) you intend to sell and ask them for the contact information of their factory authorized wholesalers. In many cases, they will provide you with the information.
From there, it's just a matter of having the proper paperwork and documentation, as well as a little persistence.
Doing Business With Suppliers
Things You'll Need To Do
First, you will need to register a business name. This can be done at your local County Office Building for around $40 or so. In some cases, you can also file online.
Next, you will need to obtain a Sales Tax ID. This is like a seller's permit, and allows you to collect sales tax on sales made in your state. Real wholesale suppliers cannot do business with you without one. Should only cost around 5-10 bucks, and take maybe 15 min. to obtain.
Pretty basic stuff really. No reason you should let some simple paperwork stand in your way of running a successful online business.
Salehoo.com
The Top Product Sourcing Site Around
It costs $67.00 in order to access the entire site, which is a bit steep. It is a one time fee though, and not recurring. So, if you are serious about this business, and stick with it, you should have no problem making that investment back.
Go ahead and Click Here to visit salehoo.com.
If You Must Deal With a Middleman...
Check Out Doba.com
In these cases, I would like to suggest looking into Doba.com as an alternative.
Doba is an Ebay-certified drop shipping solution, which means they are a trusted and legitimate service. Their site is easy to navigate and has a lot of good information that can help decide if their service will benefit you. They are also a membership site, and because they make their money from membership fees, they are able to offer products at the lowest wholesale prices without marking them up.
Again, you'll usually want to deal directly with factory authorized suppliers whenever possible, but sometimes you might find it advantageous to use a dedicated drop shipping service provider.
Doba has a free 7 day trial going on right now, which is enough time to run a few ebay auctions using their service to make some easy money. Definitely check it out.
Drop Shipping Links & Resources
- www.salehoo.com
- Pretty much the top online wholesaler directory these days. $67 for a lifetime membership + updates.
- Doba.com
- A very high quality, Ebay-certified drop shipping provider. Is membership based, so the products aren't marked up and you pay the lowest wholesale prices possible.
- worldwidebrands.com
- Ebay Certified drop shipping information site. They also have offer a very powerful but quite pricey service which includes them performing major market research for you.
- Drop Shipping Companies
- A new blog about drop shipping companies and product sourcing
Reader Feedback
Please feel free to leave any comments or suggestions here.
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Reply
- tony swinton tony swinton Nov 27, 2008 @ 5:21 pm
- i agree that the major players only seem to be mentioned here but would say that there are changes mainly with Ebay charging extra fees and losing buyers and sellers
i own buyitauction.com and to challange Ebay we charge a $5 one off membership and charge no listing fees and no final fees
we have some of the major dropship leaders promoting us as a way of increasing their sales
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Reply
- DAN DAN Nov 22, 2008 @ 12:21 pm | in reply to Evan Davis
- Hey Evan, i think you never even thought of subscribing to the salehoo.....i know you might try to "HELP" people but please dont use them for your source of income its low really LOW to earn on people who are just trying to learn.
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Reply
- Oct 3, 2008 @ 6:33 am
- Nice Idea! I am planning to start a small business on online with free shipping should have little bit profit at initial stages but having no idea. I want to suggest you people apply this idea would be definitely useful to gain profit.
Thanks for your valuable advices!
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Reply
- Evan Davis Evan Davis Mar 26, 2008 @ 10:57 pm
- Hello again. This is Evan from www.proproductsourcing.com. I was just taking a moment to revisit your site and I see that it is as good as ever. I'm also happy to see that you've added Salehoo to your list of sources. I think you'll agree that it's hard to go wrong with this resource.
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Reply
- Sparkyszone Sparkyszone Dec 1, 2007 @ 2:30 pm
- Thanks for your great resource.I am surfing the squid's to see what others are doing.Worldwide Brands are also a good resource.
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Reply
- Evan Davis Evan Davis Jul 14, 2007 @ 4:48 pm
- Hi. I represent proproductsourcing.com but wanted to say I think you've done a good job with your wholesale and drop-ship resource reviews. I notice you review some of the major players, but what about Salehoo? Just a thought.
Drop Shipping Companies
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