Wholesale drop shipping

If you are just starting your own internet business or have an established business and want to test new product lines, you want to make sure that the products you are thinking of selling will actually make you money. Wholesale Drop Shipping is a great way of testing the market and establishing whether you can make a profit on a product or range of products without spending money up front. Wholesale drop shipping enables you to sell products to your customers without paying for those products before you sell them. In other words, your customer pays you for the products before you pay your wholesale supplier.

What is Wholesale Drop Shipping

When a customer finds your store or auction and orders your product, they will typically pay for that product with a credit card. You will charge the customer for the price of the product plus a 'shipping and handling' cost. You will then send the order to your dropship supplier along with your customers address details. The Drop ship supplier will then ship the product directly to your customer with YOUR business name on the package. Now let's say the wholesale price of the product is $50. The wholesale drop shipping supplier will charge you the $50 plus shipping and handling costs. Now, you've already passed the shipping and handling costs on to your customer, so if you sell the  product at retail for say $80, you have made a profit of $30 on that particular product. This represents a substantial profit for zero risk. Just rinse and repeat this process and you can see that profits will add up very quickly.

What's the Catch?

There are a few disadvantages to wholesale drop shipping. The most obvious disadvantage is that the wholesale prices per item are slightly higher than bulk buying up front, which means that your profit margin per item is slightly lower. You will also incur a dropship fee for each item sold. This dropship fee is the handling part of the 'shipping and handling' cost which you would typically pass onto your customer. This will not reduce your profit margins, but may make your products slightly less competitive than compared to bulk ship sourced products.

The Dropship Fee

Shipping and handling fees are now accepted by most online buyers. Shipping costs are self explanatory, but what is the handling fee? A handling fee is charged by most wholesale drop shippers as they incur costs in storing the product in their warehouse, packing the product on your behalf, time spent on packing the product, and the handling of all returns and damaged goods replacements. As well as the physical costs of packaging and storage, the biggest cost saving to you is TIME. Time, as they say, is money. Use your time to grow your business as opposed to spending your valuable time packing boxes or printing labels.

So, your dropship fee is the handling part of 'shipping and handling' fee. It's all the work done by the wholesale drop shipping company to prepare your single item order to go out the door. You will simply pass this fee on to your customer as part of your shipping and handling costs. Another approach would be to add the handling fee to the price of the product. Either way, you need to pass the handling fee on to your customer. Remember, internet customers are perfectly comfortable with paying shipping and handling charges.

Other Sourcing Methods

There are several legitimate ways to source products for your home based internet business. Using drop shipping to get your business started is one of them, and should be part of your product sourcing effort but not all of it. successful online retailers use a combination of wholesale sources for their business. As well as dropshipping you need to consider light bulk wholesale, bulk wholesale and liquidation stock. Please familiarise yourself with these additional sourcing methods by reading the relevant articles on this website.