by Claudia Bruemmer
Dropshipping is a viable ecommerce strategy for small online retailers and mail order merchants because it eliminates the need to buy and store inventory as well as the hassles of shipping out merchandise.
If you can find a manufacturer, importer or wholesaler you can trust that will dropship your orders, there are numerous benefits for the small merchant.
• Low overhead
• Higher profit margins than affiliate programs
• No need for inventory storage space
• No shipping duties
The small merchant who uses dropshipping can spend more time, resources and energy on his or her core business and expanding the customer base. Dropshipping works in the following manner:
• Advertise specific products
• Take orders for those products
• Receive payment for the products
• Send the order along with the cost of goods and shipping to the dropshipper (manufacturer, importer or wholesaler)
• The dropshipper ships the product directly to your customer
While this is a very successful business model, there are pitfalls you need to avoid. If you unknowingly contract with an unreliable company or a scam artist, your reputation, profit margin, and entire business could be destroyed. Below are some tips for getting started.
• Research the dropshipper’s reputation with the Better Business Bureau in their area. Ask how long they’ve been in business and whether there are any consumer complaints. If so, ask if the complaint was resolved and how.
• Contact potential dropshippers and ask how fast they fulfill and ship orders. Ask if tracking numbers are available. This is important because if an item does not arrive, you will need to be able to track the purchase to ensure it was shipped. If your customers do not receive their order, they will expect restitution from you.
• Ask potential dropshippers about their drop shipping policies, including charges, length of time for delivery, return polices, and backordering procedure.
• When you sell products through dropshipping, the merchandise you sell is not in your possession. Your customers should know this. Tell your customers their products will be shipped directly from your supplier.
• Delivery time is important. Let your buyers know their order is being shipped directly from the supplier and may require more time for delivery. Get estimated delivery dates from your dropshipper and provide that information to your buyers at the point of sale.
• If a problem should arise during the course of shipment, or if a shipment is delayed, promptly notify the buyer. Keeping your customers well-informed and answering questions about their orders will promote repeat business.
• Be wary of a dropshipper that requires payment to access their product line. A legitimate dropshipper should not charge to set up an account.
• You do not need a minimum order when ordering from a dropshippng firm. While it’s normal to get a discount for ordering large quantities, the dropshipper should accommodate any order size from 1 to 100.
• It’s a good idea shop around for the best deal and to do business with more than one dropshipper.
• When trying a new dropshipper, order a few test items for yourself to ensure the company offers quality products, is reliable and accurately fills orders.
• Beware of dropshipping scams, start slow and build up to larger orders as you become comfortable with a new dropshipper.
• Don’t buy lists of dropshippers, they usually contain our-of-date or false information.
• When you contract with a dropshipper, be sure to get it in writing that the manufacturer, importer or wholesaler will not market to your customers.
Dropshipping can be a good business model for small merchants who want to spend more time and energy on their core business and expand their customer base. There are many benefits as well as pitfalls. Just do your research and start slow. If you test the waters and follow the advice above, there’s no reason why you shouldn’t succeed.