| pping is a topic that I first addressed in my column way | | | | on hand so you don't end up selling a product that |
| back in April, 2003, which is decades ago in Internet | | | | must be back-ordered. |
| years. But with the continuing growth of eBay and it's | | | | STEP 3: Set Up An Account With The Dropshipper |
| positioning of itself as a viable way for anyone looking | | | | You contact the company that can supply the CD |
| to launch an ebusiness, the topic of dropshipping is | | | | players and set up a reseller account with them. This |
| now hotter than ever. It is also now more | | | | can often be done online or by phone, but some |
| misunderstood than ever. | | | | companies will require that you complete and return a |
| Dropshipping has been around since Sears first started | | | | reseller application to open an account. Some |
| selling goods from its mail order catalogs over a | | | | companies may also require a tax ID and business |
| hundred years ago. However, the idea of dropshipping | | | | license. |
| still confuses many people who don't understand | | | | STEP 4: Advertise The Product For Sale On eBay |
| exactly how the process works. | | | | Now that you have your supplier lined up and know |
| By definition, dropshipping is a method of selling and | | | | that the product is in stock, it's time to make a sale. |
| distributing goods wherein the distributor or supplier of | | | | You advertise the product using an eBay auction. |
| the product (the dropshipper) ships the product directly | | | | Since you know what you must pay the dropshipper |
| to the end user (your customer) on the retailer's behalf | | | | for the product, you know what the minimum amount |
| (that's you). | | | | you will take for the product. In this case you start your |
| The process of dropshipping involves three parties | | | | auction at $100 since that is your cost. If you are |
| who take a product from manufacturing to market. | | | | confident that you can get more than $100 for the |
| They are a manufacturer, a distributor, and a reseller. | | | | product you can start with a lower price, but |
| Let's use a blue widget as a sample product to | | | | remember that if the product goes for less than what |
| demonstrate the process: | | | | it costs you to fill the order, you will lose money. Also |
| Blue Widget Manufacturing (manufacturer): This is the | | | | remember that the dropshipper will charge shipping, so |
| company that manufactures blue widgets. Blue Widget | | | | you should figure that into your sale. |
| Manufacturing does not sell directly to the public or | | | | STEP 5: The Product Sells |
| supply the retailers who ultimately sell the blue widgets | | | | Great news: your CD player sells for $135 and your |
| to the end user. They prefer to use distributors to | | | | customer pays you with a PayPal instant payment. I |
| handle the task of taking their blue widgets to market. | | | | highly recommend that if you are selling on eBay you |
| Blue Widgets sells blue widgets by the truckload to | | | | use PayPal or some other online processor to accept |
| distributors who pay $5 per blue widget. | | | | instant payments. This allows the customer to pay you |
| A1 Distributing (distributor/dropshipper): A1 Distributing is | | | | faster, which lets you place the order with the |
| the company that purchases blue widgets in bulk from | | | | dropshipper faster, which gets the product to your |
| the manufacturer and supplies them to resellers at a | | | | customer faster. |
| cost of $7 each. The distributor does not ship blue | | | | STEP 6: Place The Order With The Dropshipper |
| widgets to the reseller, but ships orders directly to the | | | | After your customer pays you, you should contact the |
| reseller's customers as the widgets are sold. | | | | dropshipper immediately to order the product on your |
| Big Bob's eBay Widget Store: Big Bob sells blue | | | | customer's behalf. The dropshipper then ships the |
| widgets to the public from his eBay store. Bob orders | | | | order to your customer under your company name |
| the blue widgets from A1 Distributing as he sells them | | | | and address. |
| (usually one at a time) and has A1 ship the blue widget | | | | STEP 7: Follow Up After The Sale |
| directly to his customer. Bob sells blue widgets to the | | | | This is where many new ebusiness people drop the |
| public for $10 each, which means that for every blue | | | | ball. Just because your customer has paid you and |
| widget sold he nets $3. | | | | you've placed the order with the dropshipper does not |
| How The Process of Dropshipping Works | | | | mean that you are out of the loop. Quite the contrary, |
| Here are the seven steps involved in starting a | | | | if there are problems with the order you are the one |
| dropship ebusiness: | | | | that will be held responsible in the eyes of your |
| STEP 1: Choose A Product To Sell | | | | customer. |
| The very first step in any sales process is deciding | | | | Be proactive in your customer relations. Follow up with |
| what product to sell. There are many factors that | | | | your customer to let them know that the item has |
| should be considered before deciding on a product to | | | | been shipped. Offer yourself as the personal contact |
| sell, but for now let's say that you decide to sell CD | | | | for any |
| players on eBay. | | | | Many people are afraid to use dropshipping as a |
| STEP 2: Locate A Supplier Who Will Dropship For You | | | | method of sales due to the horror stories that fill the |
| Using a research tool like Google, Thomas Register, or | | | | Internet about unscrupulous dropshippers who take the |
| an industry-specific resource like The Ultimate eBay | | | | money and don't fill the orders, merchandise that is |
| Dropship Power Pak (see Resources at that back of | | | | eternally back ordered, unscrupulous middle men |
| this book), you search for and find a company who will | | | | posing as dropshippers, etc. Make no mistake, the |
| dropship CD players for you. The company offers you | | | | dropshipping industry - like most other industries - does |
| a 35% mark up over cost, which means that they will | | | | have its share of shady characters who would rob |
| supply the CD players to you for $100 each and you | | | | you blind given the chance, but there are also hundreds |
| should be able to retail them for $135. You make sure | | | | of honest dropshippers who can help you build a |
| that the dropshipper has a good stock of CD players | | | | profitable eBay dropship business. |