The Drop shipping method can be a lucrative business for you once you have found your top selling marketing item (s). This method is preferred for sellers that do not want to keep their products in a physical store. It ELIMINATES tracking inventory and depreciation of items that sit on shelves collecting dust.
The way Drop shipping works is the customer will pay for the item at the price YOU have listed, which you will then collect via the payment method you have set. You will pay your distributor for the product at THEIR cost and the money left over is YOUR profit. Your distributor will ship the items selected from your website to your customer. The customer will never know the difference. So how can you pass on a method like this? In all business practices, there are cons that you will need to be aware of. Relying solely on the distributor to ship your products to customers can either make you or break you. I have listed 3 key steps to help you.
1. RESEARCH YOUR DISTRIBUTOR. Try to learn as much as you can about your potential distributor. Do not be intimidated to NOT ask the important questions needed. Their goal is to have a profitable business to attract and please their potential resellers; do ask questions. Ask about normal shipping averages and quantity in stock weekly and / or monthly. Communication is the key. Do a thorough research on the distributor before displaying their products on your website. Some businesses may offer what you want but you may lose money in the end. Review the terms and conditions from the potential distributor carefully.
2. Use your LOGO or BRAND. Some distributors will often ask if you want your logo and business name included on shipment. My reply, "I'll take a 'yes' Alex for $ 500." But seriously, if your distributor offers this perk, take it! If you do not know if the distributor will allow this, ASK. Getting your name on the products is recognition for your business and customers (existing and new) will be familiar with your brand. This could lead to increased traffic to your website.
3. CONTINUE to BUILD TRUST and LOYALTY with your distributor. Knowing that you are a good buyer, you can easily negotiate prices of products down a notch. This relationship building may take some time but is well worth it in the end.