Using Drop Shipping for E-commerce

Thanks to the ubiquity of the internet, online virtual businesses have become very popular business opportunities. Online retail stores are gradually playing a more important role in our lives than the traditional 'brick-and-mortar' retail shops. Over the last few years, a new concept called 'Drop Shipping' has emerged with the coming of the internet. Drop Shippers are basically wholesalers who are willing to ship their products directly to your customers. This article aims to provide readers with an introduction to the current state of the E-commerce industry, Drop Shipping and its benefits, and the promise it holds for the online retail community.

Online Drop Ship businesses are now very popular home-based business opportunities. According to a Forrester Inc. report, online retail sales will grow at a 25% annual growth rate over the next five years. Online retail sales will reach nearly $230 billion and account for 10% of total US retail sales by 2008. On Ebay, more than 430,000 people are making a full- or part-time living from the auction site. Many of them use Drop Shippers to auction their products. Hence, with such strong statistics, the internet entrepreneur can hope to start a retail business now and still claim a portion of the ever-growing market share.

The Drop Ship model offers many unique advantages over the Wholesale model:

1) You do not have to spend a fortune on the huge inventory of wholesale stocks before you start a retail business. This translates into a very low business startup cost. There is no risk of purchasing large quantities of stock, and finding that you cannot sell off your goods because they have become obsolete among consumers. Therefore, with the variety of products offered by your Drop Shipper, it becomes feasible to test which products have a strong demand over the internet without losing a fortune on each test.

2) Another prime advantage of a Drop Ship business is that there is no need to worry about shipping your products to your customers. You do not have to provide storage space for your goods, nor do you have to incur warehouse costs. Your Drop Shipper will take care of all the logistics and shipping of your Drop Ship business. In fact, most Drop Shippers are willing to label their products with your company name on it, so it will appear as if you are the one who shipped the products to your customers. The shipping cost for each product is also reduced, because your Drop Shipper can ship your products directly to your customers. A higher profit margin is achieved because of the reduction in unnecessary shipping costs.

3) Drop Shipping is also unique in that it allows you to 'sell high, then buy low', instead of 'buy low, then sell high'. Your risk involved in your retail business is dramatically lowered as you get paid up front for your products, making a profit on each sale.

4) There is no minimum quantity restriction on your orders. From your website catalogue, you can sell as much of your products as you want, and you can leave the indenting of stocks to your Drop Shipper. The quantity of products which you can sell over your website is only limited to your market demand, and your marketing efforts.

The process of setting up a Drop Ship business can be distilled into a few simple steps. First, you do some research over the internet over the niche market that you would like to target. Once, a strong demand for your products has been established, you contact the Drop Shipper of your choice and set up your business as the retailer of the products you want to sell. Next, you design a website complete with product catalogue and credit-card-accepting functions. The product descriptions and images can be obtained from the Drop Shipper, in most cases. After which, you need to drive large volumes of traffic to your website through internet marketing. Some visitors to your website will be converted to customers if they find your offers attractive enough. They place orders at your website and they pay you the retail prices, up front. You email the orders to your Drop Shipper, who will ship the products to your customers directly. Of course, the retail price will have to be marked up to include shipping costs as well. Since the Drop Shipper charges you the wholesale price for their products, the profit margin you earn is simply the difference between the retail and wholesale price.

Internet businesses, in general, have also many strong advantages over 'brick-and-mortar' businesses. Startup costs are generally very low, and this is well suited for those aspiring entrepreneurs working on a shoestring budget. The costs for conducting a Drop Ship business will be mainly software for setting up and marketing your business. Some examples will include shopping cart software, email marketing software, search engine promotion software, and so on. Other costs would include the web-hosting fee and also the wholesale costs of the products. In most cases, the Drop Shipper will require you to pay them a small deposit to signify your commitment and to prevent fraud.

With the low startup costs for a virtual business, you can keep trying different forms of business or different marketing methods over the internet without losing a fortune on your efforts. You can 'lose little' over many unsuccessful endeavors, but 'win big' on the few business models which you get right.

Perhaps the most attractive aspect of an online business is the ability to automate it and let it generate income on its own. This is largely possible due to software to automate the business process, like shopping cart software and email autoresponder software. Thus, Drop Ship businesses can run 24/7 without you being present physically to run it. Imagine having the freedom to do whatever you want without being an 'employee' for your business! All you need to do is to get the basics of the business up and running, like the website design and product catalogue. After which, you consistently market your website over the internet to get a recurring volume of traffic to your website. This will bring you recurring sales and allow you to make a decent living over the internet. You can repeat this process again and again with other markets of your choice. In the long run, this will bring you multiple streams of income. Online Drop Ship businesses are thus strong examples of assets that generate passive income.

In conclusion, the e-commerce industry is still very promising despite the dot-com bust a few years back. With the introduction of Drop Shipping, the hassles of conducting a retail business over the internet have been dramatically reduced. As the industry is still relatively young, entrepreneurs should get in the e-commerce game early to establish themselves as strong market players of the future.

You are welcome to reprint this article as long as you include the Author's resource box with the article.

About the Author: Ray Yee is the founder and president of Dropshipperscentral, a website which provides a wealth of informative articles, tips and resources on everything you'll ever need to know about setting up a Drop Ship Business and marketing it. Click here for the Wholesale Drop Ship Directory from http://www.dropshipperscentral.com

---

Accept Credit Cards Online Without A Merchant Account

It is often assumed if you want to accept credit... Read More

Evaluating Vendors of Ecommerce Fulfillment Services

Once your website has secured an order, you have to... Read More

Selling Online for Newbies

If you are interested in selling online, it is quite... Read More

Cost Effective Ecommerce Solutions

Ecommerce use to be about spending thousands of dollars on... Read More

The Five Most Commonly Encountered, Off-putting E-commerce Errors

While getting less public handwringing than during holiday season, the... Read More

Excuse Me, Are You Wasting Traffic?

The largest cost and concern of an internet business is... Read More

The ClickBank E-Commerce Solution

ClickBank.com can offer you multiple solutions for your e-commerce business.... Read More

Bringing the World to Your Door

According to Internet.com, by the year 2008 nearly 30% of... Read More

When Do You Ask For A Refund?

Have you ever asked to have your money refunded after... Read More

Online Shoppers Say They?ll Buy from Small and Large E-Businesses Alike

As the holiday shopping season begins in earnest, consumers say... Read More

Complementary-Relational Linking and How It Could Save Your Internet Business

The concept of linking is that sites with common interests... Read More

Creating The Perfect Ecommerce Website

If you're thinking of jumping on the bandwagon and going... Read More

The Five Steps of E-Commerce

You set up a retail business, you advertise in your... Read More

Intranet Portals ? Search and Taxonomies

Knowledge Management for beginnersKnowledge Management (KM) can be defined simply... Read More

Beginner Ecommerce Mistakes

This is a short article because in the constraints of... Read More

The Art of Being Human

This isn't the first time I have written about the... Read More

Select a Niche Market for Ecommerce

Choosing a carefully pinpointed niche market should be one of... Read More

Choosing An Internet Merchant Account

Surf to Google and perform a search on "Internet Merchant... Read More

3 Powerful Concepts That Climb Marketing Mountains

You have probably heard many times how you should offer... Read More

How to Generate Cash from Your Web Site

The Internet has changed the way people do business today.... Read More

Getting Started in ECommerce ? Part Two

In Part One we talked a little bit about what... Read More

Ecommerce Solution for the Big and Small Business

First off, you need to know what an ecommerce solution... Read More

Cyber Banking

The use of electronic cash as a means of transacting... Read More

A Tale of Two Revolutions - Ecommerce: A Historical Perspective

The World As It Then WasThe dynamic economic growth of... Read More

The Clickbank Crash of 2003: Lessons Learned

I had a rude awakening recently. I checked the days... Read More

Internet Merchant Accounts For Innocents Abroad

If you want to sell on the internet, your need... Read More

What is SSL (the little padlock)?

SSL ("Secured Socket Layer") is a protocol used to... Read More

Succeed With Your Own Home Based Business

An internet business is by far the best way to... Read More

Keep Your Customers Happy by Organizing Your Payment Options

Anyone using a slow, or an awkward payment processor had... Read More

Credit Card Merchant Account Basics

Knowing which credit card merchant account to get can be... Read More

What Are The Barriers of Implementing E-Commerce Solutions

What is electronic commerce?"Electronic commerce is about doing business electronically.... Read More

How Measuring Key Performance Indicators Can Improve E-Commerce Strategy - Part Two

Why time spent on your site is importantAll websites regardless... Read More

What You Must Know About Selling Online to Europe

The European market is a multi-billion $ sector which you... Read More