When you are starting out selling products on Ebay or as a small online marketer, you can't afford the risks of buying physical products wholesale. While drop shipping may mean a smaller profit margin, it eliminates the risk, shipping costs and hassles and you never need to pay for what you sell until you actually sell it.
If you are a large company, selling a distinct kind of merchandise, it may benefit you to buy products at wholesale. The evident plus is that by buying in bulk, your wholesaler will agree to sell you the merchandise at a very low unit price which gives you the chance for a bigger price mark-up. However, the wholesaler, to be willing to do this, will generally require you to procure items in large quantities and will, as a rule. refuse to buy back anything you can not successfully market. That's why the unit cost is as low as it is. If you are a large business and you are able to see you have a stable demand for the things you are vending, it is more than likely worth the risk to utilize wholesale purchasing.
However, if you are an E-bay seller or a small Internet seller, you can not afford to take the risks of buying wholesale. Where would you be able to store all the unsold merchandise? How would you handle returns? How will you wrap and ship and how much money will that end up costing you?
Drop shipping solves all of these problems for a cost. The cost is that you will be charged more than wholesale for the items you are selling. The advantage of drop shipping is that you don't have to buy a product until you sell it, so warehousing of unsold merchandise need not be a concern. This means you will never have to agonize about being stuck with unsold items that are no longer wanted when a newer and more in-demand item becomes available.
When you use drop shipping, you will enjoy the freedom to promote lots of different types of items from a number of suppliers and therefore you can always sell what’s hot right now. Your drop shipping company will wrap and ship the products you have ordered promptly on payment. You will have already collected the retail price you are charging your buyer and so you will always have the resources to pay your drop shipper.
Many, but not all, drop shipping companies will agree to put your name or your corporation's name on the shipping package but the return address will always be that of the drop shipping firm because that is where returns will go back to. If the item is inoperative or damaged, the drop shipper will typically replace it and send the replacement to the customer. If the item is returned just because the consumer didn’t like it and sent it back, the drop shipping firm will refund you the price they charged you less the shipping costs incurred in sending the merchandise to your customer. You will need to be especially careful to be sure you completely understand and agree to the re-stocking and other policies of your drop shipping supplier before doing any business with them.
There are companies online like SaleHoo® that keep up catalogs of reliable drop shipping companies. Using such a list may cost you a small annual fee but you will have the ability to access to a large catalog of legitimate and reliable drop shipping firms, the assurance that these drop shipping firms have been screened in advance and the availability of training programs and customer support.
There won't be as much profit margin on each item as if you had taken all the risk and completed all the hard work yourself but you’ll reap advantages that make drop shipping the only affordable course for small Ebay sellers and Internet marketers.
© 2011 Robert M. Gillespie, Jr.
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