For many new business owners the sourcing option of dropshipping can be foreign to them. Because of this I have broken this article down in 10 simple steps you can follow to understand what dropshipping is, and thus benefit from it. However, before I get into the process, lets get a better understanding of the dropship supplier first.
The supplier, also referred to as the dropshipper, has product they get either directly from a manufacturer, make them self or from some other distributor source. Their main goal is to push product, and lots of it. I get asked the question so many times as to why a dropshipper would not just sell the products them self online? That is not their business model, if they are legitimate. They make money from everyone else selling their products, and they can make a lot more money doing business that way. Think about how many stores Wal-Mart has, and how much money they make because of multiple sources of income. The drop ship suppliers work in a similar fashion. They have the whole process set up to work with as many people that can push their product as possible. They understand the selling power of the Internet, rather it be through eBay, shopping sites, classified sites (like CraigsList), or directly on a website. The dropshipper wants as many people as possible pushing their products because they will make more money because of it! They have a bottom line dollar amount to make, and as long as you are paying them that amount, that is all they care about. Now, to better help you understand the whole process, I will show you how dropshipping works with 10 easy steps. I am giving you these steps assuming you have already set up the relationship with the dropship supplier company.
1. An order is placed on your website.
2. The money goes through your merchant account into your bank account.
3. You verify that everything is legit with the order. You can learn how to do this via your merchant (once you have set this all up).
4. Contact the dropshipper to process the order that was just placed on your website. Something to keep in mind with this step is that every dropshipper is different. Some dropshippers want you to phone in the order, fax it in, call it in, email it in, or log into a back end system they have set up for you, and process the order that way.
5. Your credit card, or bank account (whatever you have set up with the supplier) is charged for the order you just processed. Lets say that the order was for $500.00 on your website, and your cost of goods sold is $250.00, then the $250.00 is what you will be charged, and you are left with a $250.00 profit. It is OK that your card has been charged the $250.00, because remember you just got $500.00 deposited into your account when the order was placed on your website originally. My advice for this step, is to set up a business credit card that you can give your supplier for all orders you process. When you do this, you can just pay off your bills at the end of the month, and if you have set up a cash back credit card that pays you for every purchase you make (in money or airline miles) then you are benefiting from that as well!
6. The order is processed by the supplier who takes care of the whole shipping process. Remember, when the order was placed the customer tells you what kind of shipping they want, and you relate that to the supplier when placing the order with them.
7. Your supplier should be giving you a tracking number that you can email to your customer, or just keep for your information in case they ask for it.
8. The order arrives.
9. The customer is happy.
10. You are happy with money in the bank!
There you have it. It really is not as complicated as some would have you think. These suppliers have done a pretty good job with making it easy on the people that are making them money! If you ever have any questions, the suppliers do not mind that you ask them. The more they can help you understand the process, the better you will do for them, and more money is made for everyone!