In a drop ship model, entrepreneurs sell products on their website which are then shipped to customers directly from the product distributor or manufacturer. The beauty of this model is that it requires little investment capital- but a significant downside is that it is often difficult to find reliable drop shippers who have interesting products, ample inventory, and the willingness to ship individual products when the need arises. Entrepreneurs should not be misled into believing that drop shipping is a way to make a quick buck. However, with the proper research, a trustworthy website and a great product, it is possible to profit from this type of online business. Here are some ways to get started on the road to success:
- Identify products that will be high in demand: When researching products to sell in your online store, think not just of the price of the product, but whether there are consumers searching for your product. There are plenty of businesspeople making a fortune by selling $1 products in bulk.
- Create a business plan: Once you have identified what type of ecommerce venture you wish to open, create a plan for selling and marketing the products. Make a note of who your target audience is – where they surf the internet and at what times of day, what their budget is, whether they are more concerned about the price or the quality of an item. Consider your profit margin, shipping costs and the return policy. Think about how much money you'll need to build the site and to market it. You can probably get some free marketing credits with your web hosting plan, but you will need to purchase more (or invest in other marketing strategies) in order to build long term visibility for your website.
- Find reliable distributors: It may not be entirely possible to know whether a distributor is reliable until you start working with him. But speaking to others who have worked with the distributor is a good way to know if your products will be shipped on time and whether they will arrive in one piece and in suitable packaging. In a drop ship model, website owners will likely need multiple distributors in order to present a varied inventory in their store. Connecting with different distributors may afford negotiating room between different vendors and create a sense of competition since each one will likely want to take the biggest share of the pie. It will also be good for the business owner, as he or she can remove vendors from the site if they fail to perform properly or if their products don't sell well, and the site can remain intact.
- Branch out: It's always important to have your own website, but you can make money by drop shipping products via established ecommerce websites such as Amazon.com or eBay. The more places you can advertise your products, the higher the likelihood that you will make a sale.
- Have excellent customer service: There are thousands of ecommerce websites on the internet, and the ones that truly succeed are those that have a strong reputation and a connection with their customers. Make sure that your customers are always satisfied by sending confirmations throughout the order process, accepting returns or exchanges and having customer service representatives that can answer product inquiries clearly and intelligently. Not only will a strong customer support team help turn potential customers into real customers, but it will likely encourage repeat ordering as well.
- Take accountability: At the end of the day, if there is a problem with an order, your customers won't care that you haven't actually seen the product or that you aren't shipping it directly. As the business owner, they will blame you for all problems that may arise. Instead of shifting the blame, which may come across as unprofessional, accept responsibility and deal directly with the problem. Acting responsibly in this way will make you a better business person and will help you forge a good reputation in your niche.