With the coming age of the internet, it opened up new venues by which small business owners could conduct business online with little to no capital expense.
Dropshipping by nature 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. As in all retail businesses, the retailers make their profit on the difference between the wholesale and retail price.
This method of conducting business is effective and can be very profitable for a retailer if done correctly, but before you start affiliating yourself with dropshipping companies here is a few things you may want to know.
Make sure you are dealing directly with the source. There are thousands of companies out there that claim they are dropshippers but in reality are middle men. These are companies that deal with the source and simply pass along information. They bring little to no value to you and your company while they sell you products at prices higher than the manufacturing price.
Dropshipping Membership Fee
Be careful of Dropshipping companies that require payment or some kind of membership fee to be part of their drop shipping program. Think about it, why you should pay a company to sell their products. On the contrary, these companies should be paying you to sell their products, they want you to sell their products. Be mindful of companies that require a dropshipping program fee, do as much research as possible before you commit.
Shipping / Blind Shipping
Make sure you know what shipping carrier (UPS, Fedex, USPS) these dropshipping companies use and shipping options they offer (overnight, next day, first class, etc.). Don’t hesitate to ask how long it takes to process and ship an order and how they deal with lost or damaged packages and or returns. Ensure yourself, that each package is being blind shipped with only your company information and nothing else but your customers products.
I highly encourage and recommend start up and small online businesses to look into drop shipping. It can be a very effective method to expand your product line with little to no out of pocket expense while increasing revenue.