Something that keeps people from starting an eCommerce business is the fact that they have nowhere to store the product inventory. You certainly don’t want boxes to be building up in your garage, taking over your guest room, or replacing your dining room table.
Shipping can be a hassle to deal with and what if you don’t sell the products you purchased?
If you don’t want to live in a house filled with cardboard, or are nervous about purchasing large amounts of products that have no guarantee of selling, starting a drop shipping business might be for you.
What is Drop Shipping?
Drop Ship Lifestyles is a reliable source for information about how drop shipping works. In “How to Dropship Profitably,” Anton Kraly, Drop Ship Lifestyle’s founder, suggests that drop shipping can be a great way to start an eCommerce business as it does not require you to purchase inventory before selling.
This infographic shows you how drop shipping works.
Since you only purchase the product from the supplier once you have sold the item online, you don’t have to buy an inventory first. This is an excellent set up for someone who is just starting and is nervous about making big investments into their business.
While deciding if drop shipping is right for your eCommerce business, it is important to know the pros and cons. Fortunately, Shopify.com lists the most notable pros of drop shipping and the common problems.
- You don’t need buckets of money
- Convenience and efficiency
- A trusted model
- Lots of competition and weak margins
- Syncing Inventory is Difficult
- It’s hard to sell products you never see
- Third party errors
How to find Drop Shipping Suppliers
Entrepreneur.com explains how to find reliable drop shippers. While there are a lot of sites that offer to send you lists of trusted dropshippers, the best way to ensure that you are doing business with the best distributors is to do the research yourself.
Entrepreneur suggests contacting manufacturers of the product you want to sell. Sometimes the manufacturer themselves will drop ship and, at the very least, they might be able to recommend a reliable distributor.
Kurt Heinrich from HubLogix suggests going old-fashioned when looking for distributors that will dropship. Some well-known distributors aren’t targeting smaller eCommerce businesses who work exclusively online, so looking for distributors in trade magazines or newsletters can be an effective way to find product suppliers.
How to Get Started Selling
Simon Slade from Salehoo tells you how to start selling with a drop ship suppliers, including how to get a Tax ID, choosing a platform and managing your listings. Getting a Tax ID may sound complicated, but it is a simple process.
The platform you choose to sell on will depend on your preferences. Going through an established online marketplace like Amazon or eBay will allow for more exposure, but running your own eCommerce website using a platform such as Shopify will give you more control. After you start making sales, you can start placing orders to your drop shipper supplier.
Keeping up with inventory is one of the most important aspects of selling with drop shippers because you don’t want to sell items that are out of stock.
Eventually, some things will go wrong and eCommerce Fuel answers these questions about what to do when mistakes are made and you’re not sure how to deal with the problems:
One of the biggest problems with drop shipping is having the inventory in which you are selling to run out of stock with your supplier. One of the ways to avoid this common issue is by having multiple suppliers. Having multiple product suppliers to source the inventory from certainly helps to lessen the risk of running out of stock. However, you still must keep track of the distributor’s inventory levels on an on-going basis.
Although you don’t have to worry as much about making huge upfront monetary investments when starting your dropshipping business, it is very important to thoroughly research the best product distributors as well as keep up with inventory availability.
Let's Discuss: Does a drop shipping business appeal to you as an eCommerce business model? Share your thoughts in the comments.