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How
to Start a Drop Shipping Business
There are so many ways
to start a home business online. One of the challenges
most people who want to start a business from home face,
is the lack of space to carry inventory. Fortunately,
there are businesses that do not require sellers to
store products. This is a "drop ship" type
of business.
What is drop shipping?
Drop shipping is the method of retail
merchandising which allows business owners to sell products
without first purchasing and stocking the items they
sell. This arrangement is made between the seller and
the supplier. In other words, a seller would display
a product, either on a website or on a mail-order catalog,
without having it in their inventory.
How does it work?
The seller charges a certain price,
which is over what the supplier is selling. The difference
between those two prices is the seller's profit.
When a buyer purchases that product,
the seller can go to his/her supplier's website or call
the supplier and place the order which will be delivered
directly to the customer's mailing address.
In this way, the seller is responsible
for the promotion of the products and the supplier takes
care of fulfillment.
As with any other business, one should
do thorough research before starting. Probably the most
important thing to consider is whether there is a market
for the product. A mistake that many marketers make
is to start with a product they think will sell, only
to be disappointed down the road when they lose money.
How do you find a hot market?
The beautiful thing about the Internet
is that all the research being done by multi-million
dollar corporations is readily available. You just need
to know where to look to simply take advantage of the
online giants' technology.
Two great, free examples that can give
one tons of niche ideas for products to sell are eBay
and Overture.
eBay trends about what is selling can
be observed by visiting eBay pulse at http://pulse.ebay.com.
One can then drill down by categories and sub-categories
and find niches of interest.
With Overture's tools you can establish
demand and supply in an instant. Simply type in a phrase
in their keyword suggestion tool: http://inventory.overture.com/d/searchinventory/suggestion/
to see the demand.
If there are advertisers spending good
money for products, then it's a good sign that the people
in that market are spending money on the items. Overture's
bid price tool shows this information: http://uv.bidtool.overture.com/d/USm/search/tools/bidtool/
Another important aspect of the drop
shipping business, is to find reliable suppliers. Some
things to look for are:
1. Are they charging a handling fee
per item?
2. Are they using reliable shipping methods?
3. How are they handling returns?
4. How long have they been around for?
By using "drop shipping" +
product of interest, in Google's search, one can locate
many drop shippers.
In conclusion, drop shipping is a great
business model for anyone who does not want to deal
with carrying inventory and fulfillment. However, it
is very important to identify a hot market where customers
are already buying and to locate a reliable drop shipper
before starting a drop shipping business.
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