Drop shipping has always been a disputed issue in wholesale forums. Beginners and experts alike have varied and sometimes opposite view points on how adequate the drop shipping model is. Some claim it to be the perfect “make-money-from-home system” while some say it absolutely sucks. My judgment is that both stand points are apparently right in their own way.
Drop shipping will ROCK! for you if you apply it the proper (or as I like to say, strategic) way, and all in all suck if you expect too much from it. If you want to start an online retail business the easy way, without hassle, then drop shipping is the perfect solution, but it’s a proven fact that profit margins are low, and the returns are slow. If you think buying merchandise ONLY from drop shippers will make you tons of money for ever and ever, then you will quickly discover with utter disappointment that drop shipping ALONE cannot reap you that kind of money.
Once you understand that drop shipping is not the end in itself but a means to an end, then only will you entirely understand the drop ship system and begin to use it the way it should be used, hence, discovering that drop shipping really does ROCK!
In this article I want to show you some of the very basic uses of drop shipping that are practiced by beginners and experts. Keep in mind though, that the strategies you can use are only restricted by your own creativity:
1. Start Selling even with a Low Capital
Drop shipping allows you to start selling a product without any capital upfront. In usual circumstances, if you decided on a product to sell, you would need to purchase stock from a wholesaler in bulk and stock your inventory in your garage or a warehouse. After selling a product you would have to buy packaging supplies, open an account with a shipping service, and purchase other stationary to prepare your sold items for shipment. All this needs a fair amount of resources upfront. With the drop ship model you can start selling as soon you’ve decided on something to sell. No need to worry about initial large capital.
2. Accustom yourself to the Online Retail Business
Any kind of business requires at least a simple knowledge of how things work in that specific business system in order to achieve any kind of success. Some businesses have a more steep learning curve than others and some require practical knowledge and experience. The e-commerce world, along with all its elements, e.i, managing an e-store, dealing and negotiating with wholesalers, servicing customers, etc. is one those businesses that requires direct experience on the beginners side. The Drop Shipping Model gives the beginner a chance to experience the “works” of Retail without any insecurities of losing money in vain. Since you don’t have to buy ANYTHING until you sell to a customer, you put none of you resources at risk. As soon as the beginner feels accustomed in the business and feels he has achieved enough dealing and negotiating experience, he can begin making real profits by sourcing in wholesale bulk and taking planned risks.
3. Test the Market for a New Product
The above two examples show particularly how beginners can apply drop shipping to initialize and familiarize themselves with online retail. But its strategic applications are not confined to the Beginner. Skilled e-store owners and experts who buy in wholesale and volume bulk employ their own strategies to take advantage of drop shipping. For example, an online retailer owning an established store selling niche specific products may wish to introduce a new product to expand or compliment his already good selling product range. But he doesn’t want to risk spending money on bulk stocking a product he doesn’t know for sure will sell as well as his other products. So, to practically test the market for the new product in real-time, he will drop ship the merchandise without the risk of ending up with a warehouse full of a new product that didn’t sell as hoped to.
4. Offer a Large Assortment of Merchandise
Any skilled online retailer will accept the fact that some items sell fast and some don’t sell as well. For fast and good selling products it is always better to source them in bulk in order to maximize profit margins. On the other hand, you may not want to block a lot of money in sourcing products that don’t sell so well, because of the slow turnover. But that doesn’t mean that an e-store owner will remove his low-selling products altogether. Instead, he will drop ship his low-selling products and many other products that may not sell at all, just to show potential buyers that his inventory is well established and offers a large variety and wide range of products. A store that offers a large variety for niche products is often more appealing.
5. List Expensive Branded Products
Branded products are more expensive than other normal products. They sell at a slower rate and are more difficult to source as well as costly. But that is no reason not to offer these type of products in your store. You can find a drop shipper that will supply you genuine branded products and you can list them in your store for the occasional sale. The effect of branded products is that they attract customers and act as a kind of bait for the up-sell of other profitable products. This effect works vice versa as well.