Wholesale dropshippers are a very popular form of sourcing product because they allow you to pay only for the items that you sell.
It works like this: You find a dropshipper and set up an account. Different dropshippers have different setups but usually you can choose to credit your account, or, you can simply leave it empty and pay for each item as you sell it. Once you’ve created an account, all you need to do is grab the dropshipper’s provided photos and product descriptions for the items you wish to sell and list them on eBay or your website.
After you make a sale and receive payment, log into your dropshipper account, select the product you have just sold and take it through the checkout and pay for it. Enter the buyer’s address details, and the dropshipper will package it up and post it!
Basically, dropshippers take all the responsibility for handling and managing stock, saving you a heck of a lot of time!
But, because they do so much of the work for you, dropshipping is necessarily more expensive than buying in bulk. To give you a general idea, you could be paying an additional $2-$5 per item to cover the handling, postage and packaging costs.
Bulk buying seems more profitable on the face of it, but sellers often neglect to fully account for the time it takes to go and get the item, wrap it up and take it down to the post office and post it.
When all is said and done, both dropshipping and buying in bulk should be equal in cost, although many sellers prefer to buy in bulk to get the immediate profits, even though that effectively devalues their time.
For new sellers the main advantage of dropshipping is the lack of risk. But for more advanced sellers, I believe that the greatest benefit dropshipping holds is the ability to offer more choice.
You may have heard the phrase ‘long-tail’, a bit of a marketing buzz-word in recent months. In a nutshell, the ‘long-tail’ means targeting the far corners of niche markets that are normally untapped by selling a lot of low-demand products. Experts have worked out that when added together, sales of low-demand products actually exceed those of single products with very high demand!
Drop shipping enables you to take advantage of that strategy very easily. For example, a DVD seller using a dropshipping supplier could promote 400,000 different DVDs! They are able to make money by selling a lot of low-demand products without any risk or storage inconvenience. This gives the DVD seller a massive advantage over regular DVD stores.
Of course, dropshipping isn’t without its risks.
Probably one of the most common problems sellers have with dropshippers is sudden stock shortages.
A sudden rush for a particular product might cause the dropshipper to sell out, leaving you in a bit of a sticky situation if you’ve got orders to fill!
Having no control over your inventory also means that if buyers ask you for a unique photo of the item (which some do after being caught out by fraud in the past), you are unable to meet their request.
This leads us to the fact that Drop shippers aren’t perfect…but if they stuff up, you get the blame. If the dropshipper packages the item poorly, causes delays in shipping, or makes a mistake with the order, then you are held responsible, even when there is very little you can do about it.
As you can see, the pros and cons are evenly weighted. Dropshipping is a very handy way to get into selling online for new sellers and it makes a great addition to other supply methods for more advanced sellers.
That's all for this week...but look out for upcoming blog posts on how to find a dropshipper and tips for managing your dropshipper to get optimum results.
Have a great week
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