- Business and Employment
Dropship Wholesale Introduction
Do you want to learn how to dropship wholesale products to your customers? If you do then you have come to the right place - this hub is all about dropshipping wholesale products as a retailer.
There are two main benefits to dropshipping wholesale goods; there are no inventory costs and there is a positive cash flow. The positive cash flow situation is created because the retailer gets paid at the time the customer makes their purchase, and then the retailer usually uses a credit card or credit terms to pay the wholesale supplier.
One more benefit of dropshipping wholesale goods is that reduces the amount spent on inventory management and shipping, and the retailer can pass these savings along to the customer.
The unpleasant reality there is a rising interest in drop shipping because many people think that it is an easy way to make money, but only ten percent of those that try dropshipping will succeed in making it a profitable business. This is not because people are lazy or afraid of hard work, it is because there is a lot of competition in drop shipping online thus every retailer must be able to compete with other good marketers who also drop ship.
If you think that wholesale dropshipping is something you want to try, then read on - running a successful dropshipping business will be the focus of this hub.
Getting Started With Your Business
Dropship Wholesale - Setting Up Business
To run a dropship wholesale business and get the best wholesale prices around, you will need to get a wholesale license or seller's permit from your state. This usually entails setting yourself up as a business, which is fairly easy to do, depending on where you live. You will have to research your local laws on how to set up a business as it varies from state to state. Once you have your wholesale license or seller's permit you will be ready to locate products at rock bottom wholesale prices.
First you must decide what sales platform you will use to sell your products. You can sell your own products online on your own website, on auction sites such as eBay, or in ads such as Craigslist or USFreeads. You can also decide to sell your products offline in a physical catalog or in mailings to your customers.
Once you have your sales platform decided upon and ready, you must decide upon which products you will sell. Maybe you already know what you will sell, in any case it is time to locate suppliers.
You can locate suppliers by searching the Internet for your products. This is a tedious and time consuming process, as you must visit many sites and businesses to locate those that sell wholesale. Once you have found a site that sells wholesale, you will still not know if they are legitimate suppliers or middlemen. You want to avoid going through middlemen as they tack on extra costs to the products as they are and extra step in the supply chain. You ideally want to find the source or manufacturer of your products. You will get your best wholesale price breaks from a manufacturer.
Most wholesale suppliers set a percentage off on their products for wholesale goods in their guidelines. You will want the lowest price that you can negotiate. Occasionally you will be able to negotiate a lower price, but this is rare.
Searching the Internet for suppliers is not the best way to find your wholesale suppliers. The best and easiest way is to use a wholesale directory such as Worldwide Brands or SaleHoo. These wholesale directories are huge databases full of legitimate suppliers for just about any product you can think of. The wholesale suppliers in these directories have been researched by the staff of the wholesale directory before they are allowed in the database. Since you know the suppliers in the wholesale directory are legitimate, you will be able to set your mind at rest about middlemen and scams.
The cost of membership in one of these directories is well worth the one-time fee that they charge to join if you are serious about becoming a retailer and drop shipping your goods. You will find that you will use the wholesale directory over and over again as time passes.
Once you find a wholesale supplier you are interested in it is time to contact them and to ask for a wholesale dropship account. Usually you will contact them through a contact form on their website, or by sending them an email to their contact email address. Always be polite and businesslike when you correspond with wholesale suppliers, this will start you out on the right footing with them, and they will know that you are a serious business person.
If you include all of your pertinent information about your company and the wholesale license or seller's permit number in your contact email you will often be granted a wholesale drop ship account immediately. Sometimes the supplier will want more details or have a form of their own that they will ask you to fill out. Sometimes they even ask for references. If you want the account, supply them with the additional information they are asking for and you will most likely be given an account. Occasionally you may be turned down, but this is rare, and if you are turned down move on to the next supplier.
If you find a supplier that charges you a drop ship fee every time you order from them, or if they do not give you more than 15 percent off their retail prices, or if they charge a monthly or yearly fee, they are not true wholesale suppliers. If the wholesale prices a supplier charges leave you little room for a profit margin, move on to the next supplier.
Once you have set up your account(s) with your wholesale suppliers you are ready to display your products on your sales platform.
Running Your Business
Dropship Wholesale - Running Your Business
Now that you have your business set up and your sales platform decided upon, it is time to place product images and descriptions on your sales platform. When you make your account agreement with the wholesale supplier make sure to get permission to use their images and descriptions for their products. Always use legal images to avoid copyright infringement.
Sometimes wholesale suppliers only have product images, in which case you will most likely have to write your own product descriptions. Describe the product in as much detail and as completely as you can in your product descriptions. This can be a challenging task, but is well worth the time as you will have your own unique content as a result of your efforts.
Once you have made a sale, contact the wholesale supplier as soon as you can to order the product(s) that you just sold. Once you purchase your product(s) from the wholesale supplier, they will pack and ship your product(s) to your customer. The package the customer receives should not have any information on or in it about the wholesale supplier, it will look like the package was sent to them by your company. A customized packing slip may sometimes be enclosed by the wholesaler in the package, indicating the retailer's company name, logo and/or other contact information.
At the time of the sale, you should print out all documentation that you receive about the sale, usually a sales receipt and an order form listing the details of the sale. You should keep records of each sale you make for future reference in the case of a problem such as a return or exchange, and also for your tax records. If a problem does arise with the sale, you will have all your information in one spot pertaining to the sale. It is easiest to put all paperwork regarding a sales transaction in it's own file folder marked with your customers name and any other information you wish.
You will need your own area to conduct your business, either a separate office or an area designated as your office space. You will need a desk and a file cabinet or two in your work area, as well as a business phone and a computer.
The easiest way to handle your accounts is to use a payment processor such as Paypal. Paypal keeps track of all your transactions, allows you to issue refunds easily, and offers reporting on your account. When you make a sale, buy the goods for your customer using your Paypal account. The money that is left over in your Paypal account after your purchase is yours to keep.
Some retailers may prefer to make their purchases with a credit card. This works well also, however you must make sure to keep up with your credit card payments to avoid owing too much on your card.
Always make sure your customers have a way to contact you. When issues arise, and they will, it is best to be able to correspond with your customer, either through email or on the phone. This goes a long way in preventing problems with your sales. If you offer great customer service, your customers will remember you and come back at a later date to make more purchases.
Taking Risks With Your Money
Dropship Wholesale - Risks And Scams
In any business there are always risks and this is also true of the dropship wholesale business. There is always the chance that your wholesale supplier will run out of stock of a specific product and you will not be able to fulfill your orders for that product until the wholesale suppler restocks.
There is also the danger that the wholesale supplier will discontinue some of your merchandise, in which case you must remove that merchandise from your sales platform. Other things can happen as well, the wholesale supplier may sell their business or go out of business for a various reasons. In this case you will want to replace the supplier with another one that sells your type of products.
If you get an order and the wholesale supplier is out of stock it is sometimes better to cancel the order and issue the customer a refund than to ask your customer to wait a long time for their goods. This reflects badly on the retailer and is not good for repeat business.
There is also the risk that the wholesale supplier will make a mistake on the order, in which case the supplier should correct their mistake at no cost to the customer. Sometimes suppliers can mix up orders and send your customer the wrong goods, in this case the supplier should correct the problem at no expense to you or your customer.
When a package gets lost, and it does happen, although rarely, the retailer must buy the goods a second time to make sure the customer's order is filled. Because the retailer must buy the goods twice the cost of the second purchase comes out of the retailers pocket.
Know that dropshipping is often the feature of some Internet based home business scams. The scam artists will promote drop shipping as a lucrative work from home business opportunity. The victim who buys into the scam will be sold a list of businesses from which drop ship orders can be placed. These businesses may not be wholesalers, but other businesses or individuals acting as middlemen between retailers and wholesalers, and who actually have no product(s) of their own to sell.