Using the Drop Shipping business model is one of the best fits for home-based business because you don’t have to carry any inventory. You can sell any number of items from your home and not have to worry about filling up your basement with goods because someone else stocks the product and does the shipping. However, there is a lot of misinformation and confusion about drop shipping and how you can best build a business out of it.
A lot of confusion can be cleared up by distinguishing between what I call a ‘drop ship service’ and an actual drop ship arrangement with a supplier. In a drop ship arrangement with a supplier, your customer orders from you, you order from the supplier and the supplier sends the product to the customer. Three parties involved but it’s transparent to the customer!
When a drop ship service is used, there is a fourth party involved. Your customer orders from you, you order from the drop ship service, the drop ship service orders from the supplier, and the supplier ships to your customer.
Here are some websites that are drop ship services:
A major distinguishing characteristic between the drop ship service and the drop ship supplier is that the service does not actually stock any product. They’re set up with online product feeds to various drop ship suppliers who actually do stock and ship the product.
You may be wondering why not just go directly to the supplier? Well, you can go directly to the supplier and bypass the service entirely. So now you might wonder why use a drop ship service at all? Are they scams?
To be fair to these drop ship service businesses, they do provide a service. Sometimes they’re referred to as ‘aggregators’ because they are able to aggregate tremendous amounts of product from a wide variety of sources all into one system (their website). It would take you a long time to do the research and setup they have done to get the amount of products in place they have.
However, a big downside of using a drop ship service is that your costs will be higher. The fact of the matter is, they are another party in the transaction (a ‘middleman’ party) and they will markup each product because they have a business to run. In addition, they all charge membership fees – usually by the month. For example, Doba charges $39.90 per month.
Another downside is that when you use a drop ship service, you have access to the exact same group of products that everyone has and therefore it’s difficult to carve out a niche. These reasons are why I never utilize them myself. I prefer to select my own niches and find my own drop ship suppliers. Saves me the middle-person layer and adds more profit for my business.
How do you find drop ship suppliers to deal with directly? Find a supplier and ask them! Oftentimes, the only thing that separates a wholesale supplier who drop ships and one that doesn’t is the minimum order. If they are willing to ship ‘one’ of something, then they’ll probably drop ship. Also you can use the Worldwide Brands OneSource directory to find drop ship suppliers (link here). I use OneSource myself to find drop ship suppliers.
For more information on how Drop Shipping is used in a Home-Based Business, see Jump Start your Home Business with Real Drop Shipping, Leveraging Multiple Drop Ship Suppliers, and Drop Shipping and Profit Margins.
Tags: Drop Ship Business, Drop Ship Home Business, Drop Shipping, Drop Ship Scams