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Is Drop Shipping the Right Selling Technique for You?

August 27th, 2009

drop-shipping-how-to-sell.jpgDrop shipping is a technique used by retailers as an effective business tool. This is the term used to describe what happens when a merchant accepts orders for products, and then pays a manufacturer or distributor to ship the product directly to the customer. The distributor typically charges a wholesale price to the retailer and the profit is made by the difference between the retail and wholesale price.

Online auction websites such as eBay have many members that will drop ship. The way this works is that a seller will list an item for sale as new and then will have the wholesaler ship the item to the highest bidder. The seller of the item profits by pocketing the difference between the final bid and the wholesale price that needs to be paid for the item. The seller will also need to pay any selling fees that are incurred. The dropshipper will stock merchandise and will sell it to you, but will ship it to the customer on your behalf.

There are several benefits for using this technique when selling on eBay. This allows you to sell a large quantity of items without worrying about keeping inventory. Furthermore, you do not have to bother with the hassle of constantly shipping your items because this responsibility transfers to the dropshipper.

To begin working with a drop shipping company, look for a reputable company’s website and sign up. Be sure to read the terms before signing up to make sure that you must not be required to make a minimum purchase. You then select the items from their inventory to sell and the distributor provides you with pictures and a description for you to post on eBay. You post the item and once the auction ends, you pay the dropshipper and they ship the item to the buyer. If the process goes smoothly, you make a nice little profit.

There are risks involved with drop shipping that sellers need to be aware of. For instance, many sellers find that certain items are on back order and must suffer a long delay until their item is delivered. Buyers may be turned off by sellers that have a history of delayed shipping. In the feedback forum on eBay, buyers may leave negative feedback which in turn may scare away potential customers.

Another potential problem is that drop shipping is sometimes used as a way to scam sellers. This can happen when scammers promote it as a work-from-home opportunity and sell the victim a list of companies from which drop shipment orders can be placed. These lists may not be wholesalers, but rather individuals that act as middlemen between wholesalers and retailers. This middleman will charge prices that will make it near impossible for the seller to make any type of profit.

Drop shipping can be a lucrative work from home business; however, the seller must be cautious of the risks and avoid possible scams.

Somewhat related article: Guide to Selling Items on Craigslist

Heather Wood has produced eight articles and three sales at Constant Content.

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