What Is Drop Shipping?

Drop shipping is a very popular business model used by many online businesses. This model allows a business to purchase the merchandise individually from wholesalers/manufacturers and have it shipped directly to customers, without holding any inventory. This is a very convenient and low cost model for people just starting out with a small business and don’t have much capital to spend.

When ever a customer purchases merchandise from your online store, they are paying the recommended retail price. The business owner makes a profit from the difference between what they charged the customer and the amount they paid to the dropship wholesale companies that stock the items.

Two Types Of Drop Shipping

1) Straight Drop Shipping

Straight drop shipping means that suppliers do not hide their identity from your customer. So your customers will know exactly where the goods came from. Some suppliers use this method to either promote themselves or they may not be opened to changing their packaging or branding just to suit a drop shipping service. This method would suit resellers who do  not want to provide warranty support directly or where repeat sales are not crucial.

2) Blind Drop Shipping

Blind drop shipping means that the supplier hides their identity from your customers so that the merchandise appears to be shipped directly from your business. This is the ideal method for most online stores. It also means that the reseller is the direct contact for any issues with the merchandise.

Drop Shipping vs Bulk Buying Profit Margins

Profit margins vary depending on the products you are selling. But, in general, bulk buying from a manufacturer/wholesaler will allow you to have higher profit margins compared to using the dropshipping model.

Business owners who have established their online store to a stage where they are making some good and consistent returns on their business with the dropshipping model can consider investing that money into bulk buying their products and sell individually to make a higher profit.

5 Benefits Of Drop Shipping

1) Low Cost

Not having to buy stock for your business means you’ll save money for starters, and you also don’t need to rent any space to keep these items. It is hassle-free! You don’t need to worry about handling and shipping items as this is taken care of by the drop ship wholesale suppliers that you have partnered with.

All you need is to have a good quality website, market the products, offer/add value, and deliver good customer service!

2) Promote More Products

There are plenty of wholesalers who participate in this drop ship model. So you can promote many products on your own online store and make money.

3) Mobility

No need for a traditional bricks and mortar business or a warehouse. You can sell online. Well known online stores like Shopify, Ebay, and Amazon are using the drop shipping model.

4) Reduced Risk

Since you are not required to buy stock, you are not stuck with any inventory that can’t sell. If the items are not popular with customers, you can simply just remove it from your website and market another product.

5) Not Labor Intensive

Since you are not manually fulfilling customer orders, it frees up your time to concentrate on other important things to grow your business.

Disadvantages of Drop Shipping

  •  Not every wholesaler/manufacturer may like or participate in the drop shipping model. So this will limit your choices.
  • Not all dropshipping wholesalers are reliable. Issues might include delay in delivery times, fulfillment errors, or out of stock items. These things can cause frustration to your customers.
  • There might be scammers trying to take advantage of vulnerable people. Make sure that wholesalers you are dealing with are legitimate businesses, so do your research.

How To Find Reliable Drop Shipping Wholesale Suppliers

If you are new to this drop shipping model, one of the best ways to avoid being scammed is to partner with certified drop shipping wholesalers.

There are places where a wide selection of verified drop shipping suppliers are listed and available for anyone who wants to market their products.

You can find real drop shippers at Worldwide Brands. To read my review, CLICK HERE!

Tips To Find Wholesalers With Google

1) Dig Deeper

When you do a search on google, ensure that you go through many listings (10+ pages) because not all wholesalers and drop shippers will appear on the first page.

2) Looks Can Be Deceiving

Not every supplier will have a good looking website. An ugly website doesn’t necessarily mean a poor quality supplier.

3) Use variations of search terms

Don’t just do a search on a single word such as ‘drop ship suppliers’. Use a variety of words to get as many relevant results as possible.

Conclusion

Starting an online business with a drop shipping model is a very easy and convenient business to set up. But you need to find reliable wholesalers/manufacturers who will partner with you to participate in this strategy. If you can’t find a supplier for your chosen niche, perhaps you can do some negotiating with suppliers that stock your niche products and work out some kind of deal with them.

To make any business successful, hard work is required. It takes time to build a long term sustainable business!

Do you think drop shipping will be something that you would like to try? Please leave comments below.

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Comments

How To Dropship Wholesale Products And Make Money Online — 16 Comments

  1. I had a decent blast of experience with dropship websites in 2009-2010 and I’d say that this is a pretty good introductory article to the subject.

  2. Your article “How to Dropship Wholesale Products and Make Money Online” came at a perfect time for me. My brother and I were just talking about it. He met someone who is very successful drop-shipping replacement parts for small gas engines. My brother wanted to know how to start a drop-shipping business himself and I didn’t have the answer. I’ll send him a link to your article. You present it so clearly. Thanks.

    • Drop shipping niche products can be a very lucrative business so I’m not surprise that your friend is doing very well with his drop shipping business. A person who wants to start this type of business must do their research properly and partner with reliable drop shippers and develop good business relationships too. Have you checked out Worldwide Brands? They have a very large selection of high quality drop shippers in their directory.

    • Many online businesses are already using this business model. So it’s not a new concept. It’s just another way to make money online. Like any other business, it does require dedication and hard work to make it successful.

  3. Thanks for this thoughtful review of dropshipping. I’ve contemplated using this business model but have never made the leap. I’ve read about dropshipping elswhere and sometimes these articles advise caution. Do you have any good recommendations of top-notch dropshippers who will not cheat you and are easy to work with.

    • Hi Mike, you can check out Worldwide Brands and SaleHoo Directories. They are good places to start looking for trusted suppliers. If you can’t find what you are looking for, then you could perhaps find your own supplier and negotiate some kind of deal with them so that both businesses benefit. A win-win situation!

  4. Hi Teresa. your article is great. I have know about drop ship model. If I want to be amazon affiliate, can I say, I run drop ship model business? I want to share it to my wife and it might be we will start to think about drop ship model, in addition you said this is low cost and no labor intensive. Labor cost is very expensive now, I can not pay them. Thanks teresa you gave me a ton of ideas.

    • Hi Christian, thanks for your comment. If you want to be an amazon affiliate, it’s actually using the affiliate marketing model, not considered as drop shipping model. With amazon, you are given a link to share to others in the hope that they will make a purchase through your unique tracking link/code. Hope I haven’t confused you, but drop shipping is a little different. There is a bit more involved than just sharing your link around. You have to deal with customers directly. Hope this helps.

  5. I have always wondered about how drop shipping works, but now you have cleared that up. From what I can gather, Affiliate Marketing is sort of like drop shipping, correct? I mean we are marketing other people’s products that we like for a set commission in return. No buying to sell. Am I correct? If not, what is the difference?

    Chris

    • Hi Chris,

      Yes, it’s a bit similar to affiliate marketing in that you are marketing other people’s products. But, there are differences in the drop shipping model.

      With a drop shipping business, you are the one managing your own business and have full control, such as setting the retail prices, dealing directly with customers (eg. customer complaints and returns), sourcing the product for customers etc. Your customers won’t know where you source your products from, they will just think it’s coming from your business. So that’s why you will be dealing with customers and making sure they have a good experience.

      With affiliate marketing, you are actually directing your customer’s to a merchant’s website through your unique tracking link/code. Any purchases made by the referring customer will generate a commission based on a set percentage. You will not keep the customer’s details to generate further sales either. You don’t need to deal with customers directly. So therefore, you’ll have less control using the affiliate marketing model.

      There are cons and pros to both types of models. You just need to figure out which one suits your style. Hope this helps.

  6. Hello Teresa,

    It is a very nice and interesting page you wrote!
    I was maybe a little bit aware of the existence of drop-shipping, but with your explanation, I think I now understand the concept very well.
    You have definitely the talent to create/build good articles, you divide your sections very well and it was a pleasure to read this article…

    Grtz,
    Bert

    • Hi Bert,
      Thanks for your kind words. I’m glad I have explained dropshipping in a way that helps you and others understand this topic.

  7. Hello Teresa,

    It is a very nice and interesting page you wrote!
    I was maybe a little bit aware of the existence of drop-shipping, but with your explanation, I think I now understand the concept very well.
    You have definitely the talent to create/build good articles, you divide your sections very well and it was a pleasure to read this article…

    Grtz,
    Bert

  8. Hey there,

    I stumbled upon your site, which is amazing I must say! Such useful and quality content.

    Very well written and easy to understand, especially for beginners.

    I will definitely visit your site in the future, thank you very much for sharing your knowledge with us and good luck.

    Kind regards

    Ct.

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