A dropshipper is a type of supplier who will send goods directly to your customer once you make a sale, so that you don't even need to see or lay hands on the item you're selling.
A supplier can be both a drop shipper and a manufacturer, liquidator or wholesaler. A "dropshipper" is simply one of these other types of supplier who happens to offer this handy service!
Using a drop shipper offers some major benefits. First of all, it requires no money down- you don't have to pay for the items until you have sold them! You then use part of the money your buyer pays you to buy the item from your supplier.
They then send it directly to your buyer using the address you supply them.
Many new sellers like that when they start out by drop shipping, they are only responsible for the listing and collecting payment of the items. There is no time spent packing items, and no worries about figuring out the most cost-effective way to ship them. It also means you can spend more time listing and managing auctions or listings. Perfect!
Another benefit is that you don't need to organize or pay for storage space. This is a big weight off a seller's shoulder.
With all those great benefits, there have got to be some drawbacks too. Something you will notice immediately is that when items are drop shipped by suppliers, they are more expensive to buy.
Drop shipped items are often US$2-$5 more than wholesale prices per item. This either narrows your profit margin, or raises your price higher above your competitors (resulting in slower sales).
The trick is to avoid highly competitive items like consumer electronics, and instead sell niche items. A niche is best described as an item which is not used every day, or that is only used by a smaller number of consumers. Sporting and hobby equipment like fencing wear or collectible toy trains are a couple of examples.
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