What if I told you that there was a part of our economy that was growing at a double-digit clip every year the past few years? And what if I further told you that you could get into it for little or no money? Well there is and you can. It’s called e-commerce my friends.
As we enter into the new year, a goal for many small businesses is to take advantage of the newfound consumer confidence, and especially the burgeoning e-commerce market, but the problem is, a lot of entrepreneurs don’t know how to really create an e-store or worry about the hassle of stocking and shipping enough product.
But they need not worry, there is an alternate solution and it is a pretty cool, one. It’s called “drop shipping.” With drop shipping, you do not have to buy or store a single product, but still can have a full load of products and jump on the e-commerce bandwagon.
How cool is that?
Here’s how it works: Drop shipping is an arrangement between you and a wholesaler or distributor whereby you virtually stock your online store with their products and you take the orders. When a sale clicks through, both you and the wholesaler or distributor are notified of the sale. The wholesaler ships the product, you get the payment, and the wholesaler sends you a bill. (Note that in some systems, you need to notify the distributor directly, via email, forwarding the order.) Either way, you simply act as the middleman (though no one knows that, it looks to the entire world as if the merchandise is stocked and sold by you.)
Via drop shipment, you can sell first-rate merchandise on your site and make a healthy profit, but without actually having to stock and ship product.
Here is an example: Say that your shoe site carries a product called “The Best Athletic Sock in the World,” and a package of 10 sells for $44, plus $6 for shipping and handling. When a visitor clicks and purchases this item, you and the wholesaler get an email notification. The wholesaler ships the package off - using your label - and sends you a bill for its cost, say $35. PayPal (or whomever your merchant account is with) takes your money and deposits it into your account. You make $15 on every purchase, and all you had to do was take the order.
You are right if you are thinking this is a pretty great business model, because it is. You do not have the labor expense for shipping and handling, you can stock name brand items, you can easily add and delete items on your e-store, and you do not have to buy inventory.
You start this process by doing your research and deciding what online products you want to carry. Then it’s just a matter of checking out the options and products. Happy selling.