So, you have been considering creating a business online and you have read about Drop Shipping? This article will give you an overview about Drop Shipping and how to start your drop shipping business.
I really like to start with a brief definition. From Wikipedia drop shipping is a supply chain management technique in which the retailer does not keep goods in stock but instead transfers customer orders and shipment details to either the manufacturer or a wholesaler, who then ships the goods directly to the customer.
So, how you make money with drop shipping? Like in most retail business the profit comes from the difference between the wholesale and retail price.
How to find business ideas?
To find profitable ideas, you can look around you. Ask your friends what they are missing and try to provide it for them. Another option is to go into Google Keyword Planner and try to identify niche keywords with high volume of searches. Do not forget to check also Amazon bestsellers categories.
Pro Tip – try to look for products that sell for more than 10$, otherwise you will need a high volume of sells to make a profit.
How to find suppliers?
There are two main strategies to find suppliers, source locally or source from China, each with advantages and disadvantages.
- Sourcing locally means that you do not have to worry with import duties, insurance, different tax systems. In addition, local wholesalers usually have lower lead times and require smaller orders. The disadvantage? Probably there are few sellers and costs can be higher.
- Sourcing from China (e.g. Alibaba.com) means that you have access to a huge amount of sellers, however with different degrees of quality/standard. The main advantage is that products from China tend to be cheaper. However most sellers require a bigger order to start producing your products.
Pro Tip – Search google for your keyword + wholesale, and do not give up on the first result page. More often than not you will have to dig deep to find your wholesaler.
Pro Tip 2 – Never put an order before having received some samples. You really want to check your product before ordering.
How to set your store?
Having identified your niche, your suppliers, and having tested a few samples, it is now finally time to set your store. For this you have a number of different options, depending on your target market and goals:
- Amazon – This is probably one of the easiest option. Amazon set everything up for you and you only need to have your products shipped to their warehouse.
- Shopify/Etsi – both platforms allow you to create a store with a few clicks and little customization
- Custom online store (WooCommerce, Magento, Etc) – there are a number of options that you might consider if you have the knowledge/time to set up your store. Naturally, these options also mean much more flexibility and customization.
For both b) and c) you will also need to find someone to fulfill your orders (fulfillment center), unless you have unused space to have your stock of products and you plan on shipping goods yourself.
Having everything set up, you are now ready to start collecting orders and forwarding them to your wholesaler/fulfillment center.
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