As a business model, drop shipping is very effective. You can run it through your own website or another outlet like an auction site. However, since this type of business has become so popular it has become a target for scammers.

Another unfortunate aspect is that people who do not understand drop shipping thoroughly see it a s get rich quick means of doing business. That leaves some people open to being scammed.

Here are some of the things that you need to consider before going ahead with a drop ship business.

1. Carry out plenty of research on your drop ship sources(wholesalers). Don’t just rely on search engines to do this. Call them and get references.
2. Avoid companies that want an upfront fee. Also, avoid a company that offers you everything you need,like a website, etc, for nothing. There has to be a catch somewhere.
3. Ensure that the drop shippers require a valid wholesale license from you. These guys are middlemen who will only take a cut of your profit and send the order on to someone else to drop ship.

Here is the best way to find a legitimate drop shipper:

If you see a product and want to sell, contact the maker directly to see if they have a drop shipping program. They might only sell in light bulk which will cost you about a $1,000 minimum. Another thing you can do is look up directories that deal with legitimate drop shippers only. Some companies like that are Doba and Worldwide Brands. These directories offer you extensive lists of products and who supplies them. These types of directories are the best way to go if you want to drop ship.

1. Once you have found a company that will drop ship for you, you must get a wholesaler/reseller license. Requirements for this license varies from state to state.
2. Next you have to set up an account with the drop shipper that you wan tot work with. They may require some sort of prepaid account if you have no business references.
3. Do not be fooled by sites that offer a list of directories for a fee. They will sell you a copy of a free directory to take advantage of your lack of knowledge.

Now that you have the basics of drop shipping, you are ready to strike out on your own.

Drop shipping is a trend that is not going to go away. Some people dismiss it or other tout it. Here are some of the pros and cons so that you can make up your own mind.

Drop ship basics

Drop shipping is offered by some wholesalers so that you can offer items for sale on your website without carrying an inventory. The drop shipper does all of the shipping and handling and you collect a profit for processing the actual order.

The Pros

1. Low overhead…you do not have to bear the costs of warehousing and inventory hassles. These costs can be quite high.

2. No inventory…you do not have to spend a lot of money to initial start your business. New products do not have to be bought. You can list a hundred things and see what sells, cheaply.

3. Time recovered…you don’t spend time finding things in the warehouse, organizing the warehouse, receiving product, etc.

4. Minimum orders…are rare. Usually you can buy just one item at a time.

5. Selection…because you don’t have to buy a minimum and there is no inventory, you can offer a wider selection of products.

The Cons

1. Smaller profit…you don’t take any risks so you make less money per sale. It’s only fair to the drop shipper.

2. Delivery issues…if the drop shipper messes up , the customer is going to call you. Be prepared and able to answer their questions before you return their call or email.

There are a few problems with drop shipping, but the pros outweigh the cons. This is a good method of starting an e-commerce business.

Drop shipping is a method of not carrying an inventory, but still selling products…usually online.  You take orders and pass the delivery information on to your wholesaler who takes it from there and ships the product for you.  You pay the drop shipper their wholesale price and pocket the profit.

Drop shipping has its advantages.  You gain savings in inventory taxes, the costs of maintaining a warehouse, and a low cost of going into business.  This is why drop shipping is very popular online.  E-commerce thrives on ease of use, so drop shipping has gained popularity in recent years.  The barriers to start a business and the instant sales that the internet offers have caused a jump in drop shipping.

A successful e-retailer does not just look up a directory and start a website.  You have to plan appropriately.  Do the research necessary to know if there is a market for the product.  To help you learn how to drop ship here are some tips.

Find a reliable drop shipper.  Check references and the Better Business Bureau.

Find out how to use the drop shippers tracking system and track all shipments.  Make sure you know how long it takes to deliver an item.  You want to know this when customers inquire.  Be sure to know this information at holidays.  No one wants to have a Christmas present delivered late.

Communication with your buyer is essential.  If there is a snag with delivery let them know instead of waiting for them to contact you.

Beware of scams.  Start your business slow until you are confident in a drop shipper.

Fit into a niche.  Small under served markets are more apt to pay off for the little retailers.

Use multiple drop shippers.  This will help you get through if one is out of inventory or has better prices.  Try to order enough to get the best discount you can from a drop shipper.

Know the drop shippers return policy so that yours mirrors it.

Test your drop shipper.  Send yourself something and see what happens.

Don’t list an inventory number on your site.  Your drop shipper may have that many on hand, but they ship to more than one customer.

Have plenty of free and useful information on your site that you update as often as possible.

Keep these tips in mind as you go about starting a drop ship business and you will be successful.

Have you ever seen a long row of warehouses and wondered who used them? Maybe they have been in an industrial area or just off by themselves somewhere. More than likely they are used by drop shippers and other companies who need to store large amounts of merchandise.

These building are not open to the public. They are for storing whole sale goods that are to be sold to retailers.

These buildings are everywhere and the companies that own them fill drop ship orders. The first step to drop shipping is to find a company that will drop ship for you. Find out what the company’s guidelines are before you agree to do business with them.

After you have decided which company to use and which products you are going to sell, then you are ready to pick the method you are going to use to get customers. Drop sipping is a very easy way to resell.

Most businesses that drop ship are happy with the results. Collect the money and shipping information from your customers then send the wholesale cost and shipping information to the drop shipper. They will take it from there.

Your chosen drop shipper will ship the product directly to the customer. That’s it. The whole thing is a very simple process. Once you have worked within the drop shippers guidelines a few times , you will have no problem processing orders quickly and correctly. It is of the utmost importance to keep accurate records of all transactions.

It is advisable that you keep a copy of all orders. Keep hard copy recored in case your computer goes down. Organize your files by month and year then alphabetically. Keep all records for three years.

Keep all of these files handy. That way if there is a question about a specific order then you can get it out in an instant. Frequently you will get inquiries about orders that have not arrived yet. You should check on the orders status before returning that email.

If a drop shipped order is broken upon arrival, your drop shipper should replace it at no additional cost. After the initial few glitches, drop shipping will be easy. Keep on the look out for more drop ship opportunities.

You may just want to add another drop ship company to increase your business. Keeping on top of the marketplace will help you to know the hot items that are out there. Keep expanding.