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.