So what is drop shipping and how does it work?  Drop shipping is a method of retail where a product distributor handles of all the shipping for you. Rather than ordering stock in bulk and keeping inventory, the stock remains with the distributor and when you make a sale, they pack the item and ship it straight to your customer with your company label on the box. 

Drop shipping can have it’s drawbacks and be more costly than buying in bulk but it definitely does not mean that you cannot make money when you drop ship. This means that staying competitive in high profile categories like electronics and clothing may be tricky, and makes that finding a niche market is that much more important. The 5 step guide below will outline how drop shipping works and help get you started.

Step 1: Find a drop shipper

You can do this by searching for your product name + “drop shipper” in your favorite search engine or researching online wholesale directories. You will find a variety of companies on the internet and will need to choose one that will fit your needs.

Step 2: Set up an account with a drop shipper

A common practice for drop shippers is to charge a small account set up fee.   While this is normal, you should be wary of suppliers who insist on you paying monthly or annual fees.  A good way to ensure that you find legitimate drop shippers is to use a wholesale or drop ship directory.  Make sure to do your homework and research any supplier or directory before making a commitment!  Read all of the fine print and make sure there is a way to get your money back if it doesn’t work out!

Step 3: List the items you wish to sell

Use your own website, estore or online auction site such as eBay to sell your items.   You can list as many as you like since you don’t have to pay for them until they sell!  Your drop shipper will likely supply the photos and item descriptions for you to use.

Step 4. After the item has sold

 After your sale is complete and you have received payment from your buyer, you will need to log on to your suppliers web site, purchase the item you have sold and have it shipped to your buyer’s address.  Alternatively, if your drop shipper does not have an ecommerce site which you can buy directly from, you will simply send them an email with the details of what you want and where to ship it.

Step 5. It is in the drop shipper’s hands

After they receive your order, your drop shipper will package and ship the item out to your buyer.  This is where it is important to have done your research.  If your customer paid you for an item that never arrives, you will be responsible for returning your customer’s money.  Not only will this tarnish your good name, but you have already paid the drop shipper for the item and you just lost that money.

It may take a little time to learn exactly what drop shipping is and how it works, but it is definitely a great alternative to purchasing and storing inventory.  Be responsible and do your research and you will be making money with drop shipping in no time!