Drop Shipping Business: An Introduction
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Drop Shipping Business: An Introduction

Drop Shipping provides a way for entrepreneurs to set up an online retail business without the massive costs that would normally be associated with setting up a warehouse and buying stock to sell.

Drop Shipping provides a way for entrepreneurs to set up an online retail business without the massive costs that would normally be associated with setting up a warehouse and buying stock to sell. Instead of holding and dispatching stock yourself, you establish an account with a drop shipping company - you will usually have to pay a small amount for membership and / or prove that you are a business and not just looking for cheap deals for yourself - and you can then buy individual products at a wholesale price without the usual requirements to buy in bulk. This means that you can list the items sold by your dop shipping supplier for sale, and only actually buy them yourself after you have an order from a customer, meaning that there are no upfront costs to yourself. When you make a sale, your supplier send the items out directly to your customer for you, with no mention of their own company so that as far as the customer knows their order has been sent by you.

There are two ways that you can go about selling these products. The most common route, at least to begin with, is set yourself up as a retailer through ebay or through the amazon marketplace, or on other similar websites. This provides a low cost route to get your products onto the market and available for customers to buy, and a large established customer base to sell to.

The other route is to set up your own website to sell from. Some drop shipping companies will even provide you with a web store for a monthly charge. This obvioulsy allows you more profit on every sale, because you do not have to pay charges on all your sales to ebay or amazon. But it does mean that you have to be able to get customers coming to your website to make purchases, which can be a long and difficult process. Generally the mark up that you can put on drop shipped products is not high enough for you to be able to pay for advertising and still get a good return on investment.

Drop shipping can also be used alongside more convential wholesaler relationships too. That means that you buy a small number of products wholesale in advance, and use drop shipped products to fill out your store so that you do not need to have tens of thousands to buy in enough product lines. You can then compete for advertising on your higher profit items. And you do not even need a warehouse to do this. If you can afford to buy in a few product lines then amazon provide a warehousing a fulfillment service for a very reasonable price that you can use.

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