Drop Ship Businesses - Pros & ConsDrop Ship Businesses - Pros & Cons

There are many opportunities on the internet. There are also many fake opportunities and scams. When it comes to drop shipping companies that sell wholesale goods at wholesale pricing there are two kinds of reputable businesses you will find:

Aggregators
Master Distributors and Manufacturers

The majority of aggregator drop ship warehousing companies are basically middlemen for master distributors or manufacturers and do not actually stock any product. Essentially these companies are the same as you in providing access to the goods and taking a cut of the sale. Typically middlemen companies offering drop shipping are not the way you want to go, especially if you plan to sell on eBay. With the additional step between the company who physically produces the product and you, the profit margin suffers. Unfortunately though there are an abundance of these sites to be found online and nearly all of them profess to have the lowest pricing. Once your customer orders something through your site, store, or auction the price is already marked up either through the fees you pay or the actual cost of the product itself, either way its tough to make money using them and I do not recommend it.

There are hundreds of manufacturers who will drop ship and many wholesale companies setup specifically to cater to small business and eBay. The trick is in finding them and once found you still need to get your business accepted. What most people don't realize is these companies prefer to only deal with reputable merchants who can turn a profit for them. Some require a great deal of hoops to be jumped through before you gain access to the actual wholesale pricing and when you think about it, it makes sense for them to do things this way. The pricing they offer cannot go public or they would be forced to compete at the retail scale and hire staff and salespeople to stay in business. The goal of any good manufacturer or wholesale outfit is to be absolutely sure they can trust you and you will use their services to sell their products. They want you to have success because in turn they become more successful with every sale you make. Minimum order requirements and extensive applications are normal for reputable wholesale and manufacturer companies. Logically, the more requirements they have the lower their pricing probably is.

The best way to be absolutely sure you are dealing with a reputable drop shipping company is to thoroughly research them and read their policies. Things like blind drop shipping and custom labels are a very good sign. Blind drop shipping is when the drop shipper makes sure the parcel ships with no obvious markings that do not convey they bought from you. Some drop shippers will up-sell to your customer by placing an advertisement inside the box or on it in some way. Custom label services are a good idea when available and increases your chance of repeat customers, the more professional you appear the better.

Other dangers include the selling of counterfeit products. Since you will never actually touch the product once its sold the best practice is to screen your drop shipper for quality before you put anything up for sale. Also, a product being out of stock can be a particularly messy situation to get into due to the time between the customer paying for the product and the drop shipper notifying you of the product being out of stock. Best practice is to keep a few of the products you sell the most of on hand to aid you in dealing with this issue if it comes up.
by Allan Morgan
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