Drop-shipping is a good buisness modle if done right,
Is drop shipping a good business? In a word yes! But the path forward is full of pitfalls, and there are thousands of unscrupulous people preying on would be Drop ship business millionaires.
Drop shipping is a wonderful business model. The best part is that you can start for very little money upfront. With a very small investment you can have 10,000s of products to sell. This is unlike buying wholesale where you would have to buy products before they are sold or that you even know that you can sell them.
You find a customer, take his or her money, order up his product for less than he or she paid you and make a profit. The customer is happy! You are happy! How cool is that.
Wait is gets better. You made a sale and you have some cash, but something much more important and profitable. You have made a relationship with someone; you have their contact information and can sell to them again.
The big secret for your drop shipping business or any business is developing a list of customers that you can keep in touch with via email and sell to them over and over again.
The dangers starting a drop shipping business.
Be careful when approaching venders, calling themselves Drop Shipping Companies
especially if they charge a fee to set up a drop shipping account for you. This arena is full of unscrupulous scam artist ready to take advantage of you. There are thousands of scams, especially if you are looking for eBay dropshipping vendors.
Do your self a favor, join a reputable membership site where drop shippers and wholesalers are pre-screened.
I belong to Salehoo. It only cost like 30 or 40 bucks a year, and all the major drop shippers and wholesalers are listed there, they have been pre-screened and are guaranteed not to be scammers.
Salehoo has training material for every aspect of eCommerce, and tools you will need to find the right market to sell to, and find the right product for that market. These things are all worth 1000s if bought separately.
For a small monthly fee, for hosting Salehoo has the easiest eCommerce store builder available.
You can read my Salehoo review here. Oh yeah, they have a forum full of helpful people like me to help get your drop shipping business of the ground.
Is drop shipping a good business model for eBay? Nope.
Drop shipping will never ever work on eBay. EBay is a bottom price market place. Trying to compete for the bottom price is a poor business plan, and creates a self destructive market.
Say you developed a relationship with a supplier for a certain type of model airplane made in china. Your price as a drop shipper is $26.00. You want to sell it for $10.00 bucks profit; you list it on eBay for $36.00.
You soon find that someone else is willing to sell it for $5.00 profit and lists the same thing for $31.00. His auction appears on the same page as yours! Who is gonna get the sale?
Not everyone is drop shipping on eBay. You may find someone selling the exact same model airplane for $23.00. What the F#*&, that is lower than you can get it from the drop shipper. This guy may be buying the same product wholesale buy the thousands, directly from china. The seller buying wholesale has something you don’t; leverage.
eBay dropshipping just doesn’t work!
Is drop shipping a good business to sell on Amazon?
Amazon’s a little better route for a drop ship business. Other vendors with lower prices may be listed there but a buyer could go straight to your product with out seeing the others prices.
The products on Amazon, are listed on the top “round robin” and your listing for a particular product will take it’s turn on top.
Shoppers on Amazon are not so much interested in finding the lowest price. They will see you have what they are looking for and click through to your sale and buy even if you don’t have the absolute lowest price. They won’t even see the other vendors offer.
Drop shippers on Amazon have an opportunity to make sales with the great up sell system that Amazon has. When some one makes a purchase of one item they show similar items that buyer can add to their cart with one click of the mouse. Your products will be listed there at random.
No one has a better email marketing system than Amazon. They will keep bringing the same buyers back to the store, where you have a chance to make a sale.
The drop shipping business model works much better on Amazon.
Starting a drop shipping business with an eCommerce store, is it a good idea? Absolutely!
As far as a business model goes it dosn't get easier than Drop-Shipping.
If you were to try eBay dropshipping, or your drop ship business was solely based on selling at Amazon, who gets the most benefit from your sale? They do, the auction site would!
Sure they are established and are willing to share their traffic with you but who gets the long term benefit from a sale, that is to say the lifetime value of the costumer? Not you.
Your dropshipping business based around an eCommerce store gives you control of the list of buyers, that you can keep in contact with and sell to over and over again.
Knowing you have a list of buyers, you can keep your prices competitive; the value is in gaining a new relationship.
Is drop shipping a good business? Yes, eCommerce is a great business and growing everyday, drop shipping is a great way to get started.
