Dropship Your Way To Ebay Success
by Tim Knox
Dropshipping is a topic that I first addressed in my column way back
in April, 2003, which is decades ago in Internet years. But with the continuing
growth of eBay and it's positioning of itself as a viable way for anyone
looking to launch an ebusiness, the topic of dropshipping is now hotter
than ever. It is also now more misunderstood than ever.
Dropshipping has been around since Sears first started selling goods
from its mail order catalogs over a hundred years ago. However, the idea
of dropshipping still confuses many people who don't understand exactly
how the process works.
By definition, dropshipping is a method of selling and distributing
goods wherein the distributor or supplier of the product (the dropshipper)
ships the product directly to the end user (your customer) on the retailer's
behalf (that's you).
The process of dropshipping involves three parties who take a product
from manufacturing to market. They are a manufacturer, a distributor, and
a reseller.
Let's use a blue widget as a sample product to demonstrate the process:
* Blue Widget Manufacturing (manufacturer): This is the company that
manufactures blue widgets. Blue Widget Manufacturing does not sell directly
to the public or supply the retailers who ultimately sell the blue widgets
to the end user. They prefer to use distributors to handle the task of
taking their blue widgets to market. Blue Widgets sells blue widgets by
the truckload to distributors who pay $5 per blue widget.
* A1 Distributing (distributor/dropshipper): A1 Distributing is the
company that purchases blue widgets in bulk from the manufacturer and supplies
them to resellers at a cost of $7 each. The distributor does not ship blue
widgets to the reseller, but ships orders directly to the reseller's customers
as the widgets are sold.
* Big Bob's eBay Widget Store: Big Bob sells blue widgets to the public
from his eBay store. Bob orders the blue widgets from A1 Distributing as
he sells them (usually one at a time) and has A1 ship the blue widget directly
to his customer. Bob sells blue widgets to the public for $10 each, which
means that for every blue widget sold he nets $3.
How The Process of Dropshipping Works
Here are the seven steps involved in starting a dropship ebusiness:
* STEP 1: Choose A Product To Sell The very first step in any sales
process is deciding what product to sell. There are many factors that should
be considered before deciding on a product to sell, but for now let's say
that you decide to sell CD players on eBay.
* STEP 2: Locate A Supplier Who Will Dropship For You Using a research
tool like Google, Thomas Register, or an industry-specific resource like
The Ultimate eBay Dropship Power Pak. You search for and find a company
who will dropship CD players for you. The company offers you a 35% mark
up over cost, which means that they will supply the CD players to you for
$100 each and you should be able to retail them for $135. You make sure
that the dropshipper has a good stock of CD players on hand so you don't
end up selling a product that must be back-ordered.
* STEP 3: Set Up An Account With The Dropshipper You contact the company
that can supply the CD players and set up a reseller account with them.
This can often be done online or by phone, but some companies will require
that you complete and return a reseller application to open an account.
Some companies may also require a tax ID and business license.
* STEP 4: Advertise The Product For Sale On eBay Now that you have your
supplier lined up and know that the product is in stock, it's time to make
a sale. You advertise the product using an eBay auction. Since you know
what you must pay the dropshipper for the product, you know what the minimum
amount you will take for the product. In this case you start your auction
at $100 since that is your cost. If you are confident that you can get
more than $100 for the product you can start with a lower price, but remember
that if the product goes for less than what it costs you to fill the order,
you will lose money. Also remember that the dropshipper will charge shipping,
so you should figure that into your sale.
* STEP 5: The Product Sells Great news: your CD player sells for $135
and your customer pays you with a PayPal instant payment. I highly recommend
that if you are selling on eBay you use PayPal or some other online processor
to accept instant payments. This allows the customer to pay you faster,
which lets you place the order with the dropshipper faster, which gets
the product to your customer faster.
* STEP 6: Place The Order With The Dropshipper After your customer pays
you, you should contact the dropshipper immediately to order the product
on your customer's behalf. The dropshipper then ships the order to your
customer under your company name and address.
* STEP 7: Follow Up After The Sale This is where many new ebusiness
people drop the ball. Just because your customer has paid you and you've
placed the order with the dropshipper does not mean that you are out of
the loop. Quite the contrary, if there are problems with the order you
are the one that will be held responsible in the eyes of your customer.
Be proactive in your customer relations. Follow up with your customer
to let them know that the item has been shipped. Offer yourself as the
personal contact for any
Many people are afraid to use dropshipping as a method of sales due
to the horror stories that fill the Internet about unscrupulous dropshippers
who take the money and don't fill the orders, merchandise that is eternally
back ordered, unscrupulous middle men posing as dropshippers, etc. Make
no mistake, the dropshipping industry - like most other industries - does
have its share of shady characters who would rob you blind given the chance,
but there are also hundreds of honest dropshippers who can help you build
a profitable eBay dropship business.
About The Author:
Tim serves as the president and CEO of three successful technology
companies and is the founder of DropshipWholesale.net, an online organization
dedicated to the success of online and eBay entrepreneurs. http://www.dropshipwholesale.net
- http://www.30dayblueprint.com
- http://www.prosperityandprofits.com
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