Drop shipping can be a very profitable low risk way of making money online. The idea is to sell products but to not store them or manage inventory at your facility or home. Say a company like a toy manufacturer offers drop shipping services to retailers. The retailer, or merchant, develops sales online and then forwards the shipping information to the manufacturer. The total price of the sale is set by the merchant and anything over top of the price the manufacturer wants is profit for the merchant. Make sense?
The process is typically quicker then the traditional warehousing retailers believe it or not. When a wholesaler can focus directly on the orders received usually they strategically have warehousing setup in each part of the country that allows for quick shipping. This tends to create repeat customers and is a great advantage over traditional store selling. When you consider all the different things needed to sell goods, like order fulfillment, sales people, stores, warehousing, and staff it takes a lot of time and money. The beauty of drop shipping is in the fact that all parties involved can maintain a more solid bottom line in their business. The wholesalers or manufacturers benefit from not needing to have sales people hired on and spend a fortune in advertising as well as the warehousing and shipping side is more streamlined and less expensive resulting in overall pricing being lower to stay competitive. Merchandise pricing is usually reliant on a businesses bottom line, lets be honest here. The merchant benefits from not having to pay up front to make the goods available to customers. Also, the merchant never even sees the product or has to worry about packaging material or shipping costs and can focus mainly on making the sales.
Overall, drop shipping is an online opportunity that many benefit from and have found great success in. A very important thing to keep in mind is returns though, the only real disadvantage of drop shipping is you cannot verify the quality of the product or be the one who physically puts the item in the shipping box, so relying on a good drop shipper is needed. Best practice when deciding to give drop shipping a try or to even expand your existing business to include more product is to purchase a reputable guide with all the information you need to succeed. As with any business venture you are not accustomed to, drop shipping can have its dead ends and unforeseen complications, its best to find a good source of information that offers a money back guarantee like DropShipping4Idiots.com. With a guide and easy step by step instructions you can easily avoid the common mistakes people make when starting out with drop ship wholesalers and the process of drop shipping.
Source CMT Music Awards 2012