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How To Start a Wholesale Dropshipping Business

Tuesday, October 26th

How to Start a Wholesale Dropshipping Business

After researching what kind of goods other online retailers offer, the next step is deciding what you want to offer. Most small scale online retailers serve a niche market. If your research reveals someone else has a particular market covered, with a well established reputation for fair prices and good customer service, choosing to offer the same goods for sale might not a profitable idea. On the other hand, it is possible you could beat them at their own game by offering better on every level.

The niche market you, as an online retailer using a wholesale drop shipping supplier, can best serve is the one centered on things you know well. Is there some special training, job or life experience that has brought you to be the reigning authority on, for instance, the working parts of cuckoo clocks? Is it your hobby to collect silenced ones and make them tweet again? Then possibly selling cuckoo clocks is for you because you would know the rarity of a baritone birdie announcing the hours. Niche market buyers know what they want. They want to do business with someone who understands the object of their desire and the reason they desire it. In short, plan to sell what you know.

Research suppliers of your possible product. Have more than one product in mind, but keep it the same category - don't attempt to sell cuckoo clocks and running shoes from the same webstore. Potential customers will doubt the validity of you being an expert about both.

Not every supplier will do drop shipping for small businesses. You can do this search online. Be thorough as you want to get as close to the source of your potential product as possible. A wholesale drop shipping supplier can be the manufacturer, a distributer or a wholesaler. Wholesale drop shipping suppliers often have catalogs with hundreds of thousands of products they warehouse and will ship for you to your customer, sometimes with your logo on the shipping label.

Part of your research should include checking on the availability of your product on the wholesale drop shipper's shelves. Is it out of stock for months at a time? Have more than one wholesale drop shipping supplier source for your product. If supplier "A" is out of stock, supplier "B" might have it even though they get it from the same manufacturer.

Learn the costs of doing business with wholesale drop shipping suppliers. All will charge more for single item processing than they would for bulk. Some require monthly minimum purchases. Some charge a fee like a monthly service charge. When you are ready for business, you will need to have some sort of business agreement with them already in place. Sometimes you can use product information and photos from the supplier's catalog, saving you time and money when it comes to preparing your sales platform.

By this time, you should have already decided where you will offer your products for sale - your own web store, through eBay or any other online avenue you choose. Make sure the manufacturer of your product will allow you to sell it on eBay. Some do not.

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Wholesale Dropshipper FAQ

Dropshipping is a way of selling goods without having to personally maintain them in inventory. You act as a liaison between customers and products, passing along orders to the supplier(s) who then ship the products directly from their warehouses to your buyers.
There are lots of benefits to wholesale dropshipping. You don't have to lease a warehouse or storefront, which automatically means your operating costs are lower. It's a less risky option than many other sales models available today.
The easiest way is to select a wholesale dropshipping partner. These services do most of the legwork to source products for you to sell and generally help you advertise your "inventory" on various marketplaces and platforms online. You'll still need to do some work to spread the word, through social media buzz and targeted ads, if you want to maximize your profits.
Sometimes. You'll find services that charge a one-time fee of a few hundred dollars, and others that have monthly fees ranging from $30 to almost $400. Typically, the higher the monthly costs, the more advertising and automation features you get. These fees are in addition to your business costs of setting up a website, advertising, and so forth.
Yes. Once you start to make sales, you'll need to take out a business license according to the requirements where you live. Most payment providers will require proof of those credentials before passing along your profits.
That is one of the trickier aspects of running a dropshipping business. Your customers see you as the business, and so they'll expect you to handle refunds or replacements. Every supplier has different terms for returns - which means you could be out of pocket on the refund until the supplier fixes the situation on their side. Some dropshipping experts recommend that you order product samples for yourself, to decide what to carry in your store and make sure that it's quality merchandise.
In all frankness, there are some dropshippers that are 100% above-board, and many others that are little more than a thinly-veiled scam. Do your due diligence before committing to a dropshipper: find the service's rating with the Better Business Bureau, see what other clients have said about using the platform, and determine how long the company has been in operation. There are trustworthy dropshippers out there, but choose carefully.
Most dropshippers have a free trial period, so you can see how well the service works for you. You could have as long as 60 days to request a refund, depending on the terms of the dropshipper's satisfaction guarantee. Again, it's important to check the reputation of the service you're considering - because all of the guarantees in the world only count if the company actually honors it (and there are some that don't do a very good job of that).
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