Many people shy away from starting an online
store because of the initial start-up costs. But imagine if someone offered to pay your
up-front inventory costs on thousands of items and manage all your shipping and fulfillment
operations for you. It'd be much easier to get started, and you could run your business
from anywhere in the world. Sound too good to be true? Well, it's not,
if you know about drop shipping. In this video, I'm going to explain exactly
how drop shipping works, show you how to find drop shippers for your products, and give
solutions to some common problems associated with drop shipping.
And if you stick around until the end of this video, you’ll get access to “The Ultimate
Guide to Dropshipping” a free bonus guide that shows you exactly how to start a dropshipping
business. Alright, let’s dive in. What is drop shipping? Well, drop shipping
is a retail method in which you don't keep products in stock. Instead, you partner with
a wholesale supplier that stocks its own inventory - you transfer customer orders and shipment
details to them, and they ship the goods directly to the customer.
The biggest benefit of drop shipping is you don't have to worry about fulfillment or inventory
issues. Also, most customers don't know you're drop shipping, since "private label shipping"
lets you ship from the wholesaler with a return address and invoice customized to your ecommerce
store. Let’s quickly go over a few other benefits of drop shipping.
One - You don’t need buckets of money. Drop shipping makes it amazingly easy to get started
selling online. You don't need to invest heavily in inventory, yet you can still offer thousands
of items to your customers. Two - Convenience and efficiency. Successfully
launching and growing an ecommerce business takes a lot of work, especially if you have
limited resources. Not having to worry about fulfillment is incredibly convenient and frees
up your time to concentrate on marketing, customer service, and operations
Three - Mobility - with all the physical fulfillment issues handled, you're free to operate your
business anywhere you can get an internet connection.
Four - It’s a trusted model. You might be thinking that this sounds like some sketchy,
fly-by-night model – but it's not. Plenty of online stores, and even major retailers
use drop shipping to offer a wider selection of products to their customers without having
to deal with increased inventory hassles. How do I find drop shipping wholesalers? Well,
first off, in the United States, most suppliers will ask you for your business EIN number
and a copy of your state sales tax and/or resale certificate. So you may want to consider
having your legal ducks in a row before contacting suppliers. However, this isn’t always the
case and there’s no reason why you can’t start contacting drop shipping suppliers immediately.
Now, if you already know what products you'd like to drop ship, contacting the original
manufacturer is the easiest way to find qualified distributors. Not all distributors will be
willing to drop ship, but it will give you a list to follow up with.
Unfortunately, the market is littered with scams and low-quality information. If you
do decide to invest in a directory, we recommend the paid directory World Wide Brands as a
reputable source of drop shipping wholesalers - but it's still very important to exercise
caution. Additionally, if you’re using Shopify you
can access a variety of apps in our app store that will connect you directly with reputable
dropshippers. I’ve linked to a few of these in the description of this video.
How to use Google to find wholesalers. Google can also be an effective tool for finding
drop shippers, but you need to keep a few things in mind. Here are some tips you can
use to find a wholesaler through google. The first thing you’ll want to do is Search
Extensively. Wholesalers and drop shippers are notoriously bad at SEO and marketing,
and usually aren't going to pop up on the first page of Google for a term like “handbag
wholesaler.” Instead, you'll need to dig deep into the search results, often going
through 10 or 20 pages of listings. Additionally, you should use lots of modifiers:
As you hunt for suppliers, don’t stop with a search for “wholesale” - make sure to
use other terms, including “distributor” , “reseller” , “bulk” , “warehouse”
and “supplier.” It’s also important to note that suppliers
also tend to have outdated, late ‘90s-era websites. So don't be scared away by abysmal
design and layout. While a sleek, modern site could signal a great supplier, a low-quality
one doesn't necessarily indicate a bad one. Now, despite our glowing recommendation, drop
shipping isn't ecommerce nirvana. Like all models, it has its challenges and downsides,
which we’ll quickly go over now. One - There will be loads of competition and
weaker margins. It's true. Products that can be drop shipped will spawn a lot of competition.
Usually this will lead to cutthroat pricing and diminishing profit margins, making it
hard to build a viable business. To be successful, you typically can't compete
on price. Instead, you'll need to offer value in a different way, usually through top-notch
product education, service or selection. Two - syncing inventory is difficult and leads
to out-of-stock items. The best way to mitigate this problem is to work with multiple suppliers
with overlapping product lines. It's inherently dangerous to rely on a single supplier. Having
two suppliers doubles the likelihood that an item will be in stock and available for
shipment. Many sophisticated suppliers offer a real-time
product feed, and you can use a service like eCommHub to easily sync your Shopify website
with the warehouse. Eventually, you’ll sell a customer an out-of-stock
item. Instead of canceling the order, offer the customer an upgraded product or discount.
You might not make much – if any – money on the order, but you'll likely build a loyal
brand advocate. Three - It’s hard to sell products that
you never see, however In today's world, it's possible to become an expert in just about
everything through information online. Selling products from manufacturers with detailed
websites will allow you to become intimately familiar with a product line without ever
having touched a physical item. And when you do need to answer specific question about
a product, a quick call to your supplier or manufacturer will give you the answer you
need. You can also buy your most popular items to
get acquainted with them, and then resell them as “used” or “refurbished,” often
recouping most of your investment. Four Third party errors. Involving a third
party will result in more fulfillment errors, mistakes, and logistical problems. Even the
best dropshippers make occasional mistakes, and mediocre ones make a lot of them. Suppliers
are fairly good about paying to remedy problems, but when they're not, you need to be willing
to spend what's necessary to resolve the issue for your customer. If you try to blame your supplier for a fulfillment
problem, you're going to come off as amateurish and unprofessional. Similarly, if you're unwilling
to ship out a cheap replacement part to a customer because your supplier won't cover
the cost, your reputation is going to suffer. One of the costs of drop shipping convenience
is the expense of remedying logistical problems. If you accept it as cost of doing business
– and always make sure to put your customer first – it shouldn't be a long-term issue.
Is drop shipping the path to overnight ecommerce success? Of course not. As with any successful
online store, you'll need to invest over time in a quality website, marketing, and customer
service. But drop shipping does provide an easy way
to get started and the ability to leverage other people's capital without having to invest
thousands of your own. When managed correctly, it can form the foundation of your own successful
online store. If you’re looking to learn more about drop
shipping - check out our “Ultimate Guide to Drop shipping” , a free comprehensive
guide that covers everything you need to know about building and running a successful drop
shipping business. Thanks for watching and if you found this
video helpful please be sure to let us know by clicking like or leaving a comment below.
