True drop shipping is defined by only three (3) players.
1- The CONSUMER who is the final purchaser of the product. 2- The RETAILER who markets, advertises and accepts payment for the product from the consumer. 3- The DROP SHIPPER who ships the product for the retailer to the consumer.
Let’s look at each player. We will assume that we all know the consumer but retailers take many forms. Some are brick and mortar stores or catalog companies and others are internet based.
Retailers bear the expense, time and creativity to show, market, advertise, price, sell and collect payment for a product. Upon selling and collecting payment for an item, the retailer then sends an order for the item to the drop shipper who ships the item to the consumer. The drop shipper collects the wholesale price payment from the retailer.
Drop shippers generally have no relationship or contact with the consumer other than shipping the merchandise. Sometimes a product may be shipped with the retailers name on it. This is called private labeling. There can be numerous variables and special arrangements between the retailer and the drop shipper. Visually the basic relationship in drop shipping is a triangular one.
Retailers should look for products to sell that are direct from the factory or as close to factory direct as they can possibly get. Just one middleman can cause the final retail price to be too high. Today the consumer is able to price compare with great efficiency and speed. The retail price can make or break the retailer with that same speed and efficiency.
Retailers should most definitely look for products that are unique. Not cutesy unique but truly unique as in rare or 1 of a kind. This sets you apart from other retailers and allows you to markup your item for a greater profit. I know this is a tough one to research but it is the most important part of retailing today. Just look around you, everyone seems to be selling the same things! You may spend more time on this than any other aspect of drop shipping but you are mining for gold. When you find that unique manufacturer with truly unique products then you can begin to file your gold claim.
Look for companies who have a 100% satisfaction guarantee with money back. Look for drop shippers who are comfortable working with a retailer of your size and position. Look for companies who have a firm grasp of their inventory and who can always ship what you sell. Look for drop shippers who are responsive and eager to work with you.
Look out for drop shippers that pass themselves off as manufacturers when they are a 2nd or 3rd tier middleman. Do some research about the company and know with whom you are dealing. Markets are too efficient to support many markups and you will not be competitive with your prices. Look out for drop shippers who are vague about inventory and shipping times.
Finding a good drop shipper is a lot like finding a marriage partner. You need good compatibility, good communications and someone who cares about you.