Dropshipping is a simple marketing concept, a wholesaler or manufacturer allows you to offer their goods for sale either on your web site or through online auctions such as eBay. The advantage to you as the seller is that you do not have to pay for the item until the sale is made and you have been paid. In addition the supplier will ship the goods to your customer on your behalf.
The advantages would appear to be obvious, especially if you are just starting out on your new business. There is no need to spend any money on buying your initial stock nor do you have to find anywhere to store your goods. Shipping can be an expensive and time consuming operation but with dropshipping your supplier will take care of all of this.
On the face of it this sounds almost the perfect business for anyone who is starting out as an Internet marketer. However, before rushing into dropshipping the would-be entrepreneur needs to consider several factors. Although there are plenty on companies who are prepared to offer drop shipping facilities they are not all as good as one another. Some supposed dropshippers are little more than middlemen who buy the goods from other wholesalers and add a mark up and then pass them off as dropship items. The price they charge is often very little less than they are being sold for on the auction sites. Your chances of making any profit with such companies are pretty low.
The first test when looking for a suitable dropship company is to look at the goods they are offering and then check them out on eBay. What is the competition and how much are they asking for the product on their listings. You can also se how successful they have been at selling the items by checking their history. By doing this you will discover if there is a market and what price you could charge.
Over the years eBay have raised their charges considerably and having worked out the gross profit you are likely to make you must now calculate what selling costs you will incur. There will be a listing fee plus final sales fee and PayPal charges to calculate. Once you have worked out these you will be able to discover what profit per sale you could expect. It is also worth remembering that many sellers consider they are doing well if they sell 50% of the items they list so you should also take the listing cost of unsold items into your calculations.
Dropshipping can be a useful tool, especially when you re starting out as an Internet marketer but do not be deceived by some of the claims made for it. Do your research first and ensure that it is going to be possible for you to make a reasonable profit for the time and effort you put into the business.