|There is much discussion throughout usenet, chatrooms and forums about drop shippers, and I have sat through many heated threads about the subject. Many will tell you that drop shipping is a scam, it don't work, you'll never make any money...But I know these things just not to be true, as I have talked with those doing it, work with those who do, and am the webmaster of the site belonging to someone who manufactures and drop ships his products. I have also used this method in the past.
First of all, using drop shippers is not a get rich scheme, or is the answer to all of your problems, and, like any home based business, requires some research and some work, but done correctly, can be very profitable.
Let me explain the proccess in a nutshell.
First you decide what you are going to sell online. You then find a drop shipper that carries the product. You place the images and descriptions on your website or auction. When you make a sale, you send the order on to your drop shipper, who in turn sends the product to your customer. The profit that you make is the difference in the price that you charge.
That is the process in a nutshell, but it is a bit more complicated than that. Let me explain...
Deciding what to sell is one of the most important decisions that you will make, and this is where many trying to get into the business fail. You must take the time to research the market. This research involves finding out these things...
1) Pretend for a moment that you have decided to sell remote controlled coffee makers,(I am using this as an example, as one of these sounded real good yesterday morning. Pardon me if I sound like your Junior Achievement teacher in high school.) and is there alot of people selling these handy little devices? If there is, this just might not be a good thing, as an oversaturation of a product makes it difficult, or impossible market to compete in. You can find this out by going to eBay, or to search engines and looking at what others are doing. An over saturated market such as home electronics is just about impossible to compete in, without cutting prices, and right square into your profits. This is why someone selling rolling pins or dog shampoo might just make a killing, while the guy selling car stereo systems is not selling anything but a pretty cool website.
2) Are there people actually buying Remote Controlled Coffee Makers? One way to find out, is by going to eBay and looking at how many bids and clicks that those who are selling these coffee makers are getting. Of course there are many other ways to research this,such as market research software, and I will get into these in a later article. There must be a market to sell your products to, or you are just chasing your tail. This part is called "demand". Demand for the product that you are selling. This is why those home based businesses that are involved in "niche markets" seem to thrive. Before you should start selling these jumped up java makers, you should find out if there is a market of people who will by them from you.
3) Where can you get these coffee makers. Are you getting them from the manufacturer or authorized wholesale distributor? If you don't you might be getting ripped off. Research your Sources! Do they drop ship? If not, then you will have to stock your inventory. You can save a grip of money by doing this, if you have the room to do this. Buying in bulk can save you money, if the shipping fees (do the research first!) don't eat all of your profits. If you are just starting out on a shoestring budget, then drop shipping might be your better bet.
4) Do the math!!!Figure in all of your costs! After you have decided what to sell, you must figure what you are going to sell it for. Once you have added in selling fees (if you are using auctions to sell), you must consider shipping fees (if you are not using drop shippers), taxes, and any overhead that you might have. License fees and hosting fees, if you own your own site.
(I hope these things that I have mentioned here do not discourage you, because these are the same things that you need to run any business. If these things do overwhelm you, you might want to consider affiliate programs for your first internet venture, as they cost nothing).
With all this considered, you should still be able to make a profit with the product that you choose to sell. If the math don't add up to profit for you, then you should find a different product to sell.
I have only touched on the basics here, but I hope that this article has explained the basics. I have also included some helpful resources.
About the Author: Troy Breitmeyer has been involved in Market Research, Web design and affiliate marketing since 1996 and has been interviewed on Chris Malta's "Common Sence Internet Radio. Troy is currently working on an ebook that teaches affiliate marketing to webmasters.
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