What is Wholesale Dropshipping?

Monday, November 28th

Wholesale drop shipping is a number of good things, and a few not-so-good, but with comprehensive research on your part, it can a great way to start an online store for less than a boatload of money.

In essence, wholesale drop shipping is a retail practice which closes the distance between a manufactured product's source and its end user, the consumer. It does away with layers of middlemen and warehouses. And it is a tried and true business approach with several decades of use to back up that claim.

With the advent of just-in-time inventory control, wherein an assembly plant has needed components arriving on-site when they are needed rather being stockpiled as in-house inventory, wholesale drop shipping shields a small, or large, retailer from the burden of up-front costs of acquiring and storing inventory. Wholesale drop shipping allows a retailer to test the salability of new products without a major investment. It also allows a retailer to offer a wide range of products within the niche market it operates. This is possible because the retailer doesn't buy the product until after the consumer, has paid for it.

Starting from the end of a sales transaction, a customer receiving a product he has purchased, and working backward to the beginning, it goes like this:

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Wholesale Dropshipper FAQ

What is dropshipping?

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.

Why would I want to start a dropshipping business?

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.

How do I get started?

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.

Are dropshipping services expensive?

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.

Are there any legal requirements for setting up a dropshipping business?

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.

What if a customer wants to return a product?

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.

Are dropshipping services trustworthy?

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.

What if I'm not happy with the dropshipping service?

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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