If you do not want to purchase directly from the manufacturer you can purchase goods from
drop-shippers or wholesalers.
How does drop-shipping work? – If you were to purchase an item from a supplier for
$30.00. You may decide to sell that item for, let's say $48.00 plus $4.50 shipping. You collect the payment of
$52.50 and address information from the customer. You then forward the
$30.00 plus $4.50 shipping to the supplier and keep the $18.00 as profit. You never have to touch the product, as the supplier ships it to the customer on your behalf.
This type of arrangement can be great for both parties. The supplier does not have to open a storefront, or hire sales people to sell their products, and you do not have to get involved with order
fulfillment.
You can earn your cut of the profit without holding stock; your start-up costs are minimal, your overheads are low and you have no packaging costs to consider.
Here are some of the advantages of working with drop-ship companies:
- The drop-shipper researches the products and provides you with their lists/catalogues at trade prices
- The drop-shipper often has sales material that can be copied directly onto your site saving you from creating your own content
- The drop-shipper fulfils your order once you have been paid
- The drop-shipper packages your orders
- The drop-shipper sends your orders direct to your customer
- The drop-shipper is transparent to your customer - as far as they are concerned their purchase has come direct from you
- The drop-shipper holds all the stock
Some of the biggest retailers on the internet use drop-shippers, including the likes of Amazon. However, drop-shipping can be a little more expensive than using traditional wholesalers
and it’s definitely more expensive than purchasing directly from the manufacturer.
Traditional wholesalers will not ship directly to your customers but the
profit margin achievable is generally much better because you are providing your own
fulfillment and you will probably
need to keep stock of each product you sell.
If, like us, you’re not based in North America you may not be able to use some of the
more established drop-shipping services. Be aware that drop-shipping is still very much in it’s infancy outside of North America. If you specifically want to target your home market make sure the supplier is happy to deal with you in the country you are based. Carefully check the customs and import procedures the drop-shipper employs,
we have heard horror stories of parcels being held by the postal service who require the local tax and an administration fee to be paid before the goods reach your customers.
However, the whole point of ‘drop shipping’ is that you don’t necessarily have to be in the country you are targeting for sales. In other words because you will not be responsible for fulfilling the order, there is nothing stopping you from targeting your site at a North American market.
Continue to Wholesaler
and Drop-shipper list
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