ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

How to Begin a Drop Shipping Business

Updated on February 24, 2017

Introduction

Drop shipping involves ordering goods at wholesale price to supply retailers or end users who place an order for them.

In old-time commerce terms, it is a perfect description of the ‘middle man’ business. By doing this, the drop shipper is able to avoid the cost of inventory and physical location as orders are placed only when customers request them,

The Entrepreneurial Slant


Many people have unique ideas that they consider worthwhile to give them an entrepreneurial landing. However, when faced with demands that are necessary precursors to running a business, they get intimidated.

Starting off a business is possible traditionally when:

There is a product on offer

When you have goods or services to offer that others will agree to pay a price for, then you have a basis to start a business.

Are there willing buyers?

If ever there is someone agreeing to buy what you have to offer, then you are close to starting off a business.

Do you have a contact point?

Nothing gets sold in a vacuum. Most times, you need a place of contact so that people can reach you. When this is possible, it is easier for your stock -in -trade to get sold.

Do You have a process?

A business process is another needed ingredient before you consider going into a business. Whatever you are offering has to be the outcome of a process. Whether it is a service or a product makes no difference here.

A system of record keeping

You need to take records of your business in sales, purchases and allied processes. Having a record enables you to understand how your business is doing and the progress you are making.


The Delivery

Source

Why Drop Shipping Makes Business Easy


When you explore drop shipping, you do not have a need for a physical location as you only need an order to start off. What you need to do after securing an order is to get a source to procure the order from, initiate and conclude the order. The source of procurement will deliver the order for you and you have no further commitment in the transaction.

Depending on the size of orders you process in a month, you might have no need for staffing. It will be advisable to have minimal staff till there is a need to get more. The personnel you need should only be in correspondence with the size of your business.

Starting off with Drop Shipping

It is important to come to grips with the essentials of the business if you must break-even or be able to make money out of it. The following are important;

Know your target market

Drop Shipping should not be an all-comers game and you should only get involved to the extent you are comfortable with and understand. If you are to drop ship cosmetics, for example, you must make an analysis of the cost your customer is willing to pay, the cost of shipping and the ordering cost. You should only go ahead when the cost of shipping and ordering cost in total, exceeds the price the customer is willing to pay. If this is not the case, you might end up running at a loss or barely make even.

Confirm the Wholesale Price

Whilst it might be true that you are getting goods from the wholesaler, you need to confirm that the price that you are given is not the retail price. Many wholesalers will be willing to sell few units at only the retail unit cost as against the wholesale unit cost for people with bulk orders.

It is very important before starting off with drop shipping that you confirm the terms of supply from the wholesalers so you don’t end up competing with orders that have reduced cost advantage. This will put you at a disadvantage and you do not want to start out your business by incurring losses.

A Niche Market is often a Hit for Drop Shipping Business

There are a number of items that will fit the drop shipping bill but commonly or widely sold products might be a hard sell. You need to open up a niche market where there are possibly few competitors and low awareness on how to source for the wholesalers. When this is the case, it will be possible for you to explore the possibilities and enjoy a monopoly for the short to medium term and make a kill.

Keep Researching

The truth is that most successful entrepreneurs end up with a basket of products that they offer for sale. They might also be in the services industry ( in what is described as a diversified portfolio). This helps to spread risk and ensure that when an item or product line is affected, you can stay afloat with the others. No single unfolding circumstance might be in a position to crash your entire drop shipping business without an economy-wide effect.

A Sample Product

Source

A Demo

working

This website uses cookies

As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://corp.maven.io/privacy-policy

Show Details
Necessary
HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
LoginThis is necessary to sign in to the HubPages Service.
Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
AkismetThis is used to detect comment spam. (Privacy Policy)
HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
Features
Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
MavenThis supports the Maven widget and search functionality. (Privacy Policy)
Marketing
Google AdSenseThis is an ad network. (Privacy Policy)
Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
Index ExchangeThis is an ad network. (Privacy Policy)
SovrnThis is an ad network. (Privacy Policy)
Facebook AdsThis is an ad network. (Privacy Policy)
Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
AppNexusThis is an ad network. (Privacy Policy)
OpenxThis is an ad network. (Privacy Policy)
Rubicon ProjectThis is an ad network. (Privacy Policy)
TripleLiftThis is an ad network. (Privacy Policy)
Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
Statistics
Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
ClickscoThis is a data management platform studying reader behavior (Privacy Policy)