Introduction to Drop Shipping

First, what is drop shipping?

When you open a retail store, you have 2 choices: to hold inventory, or not. You can buy products in bulk, unpack them, and ship them to your customers as you generate sales. OR, you can find a wholesale distributor who will warehouse the item for you and ship individual items directly to your customer.

Drop ship, “pack and ship”, “direct fulfillment” – they all mean the same thing. A distributor who drop ships will provide the reseller (you) with a wholesale price for a set of products that you can then mark up and sell to a customer. They will ship the item to your customer for you, and you never have to handle the product.

Inventory is an expensive burden to carry. Drop shipping allows the reseller to focus on marketing the business and eliminates the hassle, time, and cost of dealing with the actual products they are selling.

Now, where can you find reliable drop shippers?

Be careful! Many websites will tell you they have directories, all in one solutions, and that they themselves are drop shippers. It is very important that you take the time to research and explore the various distributors and wholesalers to find products you want to sell and prices that give you the ability to make a profit.

All of the suppliers that you find here from Inventory Source are VERY well established suppliers who have been doing wholesale and drop ship business for years, even decades. We only recommend suppliers that have a large selection of products, have established processes and policies, and that are 100% reliable and responsive to the resellers of their products. Another good source for drop ship suppliers that have smaller selections of products is the Drop Ship Source Directory.

How do you get started with a new drop ship supplier?

The first step is to submit a reseller application. Inventory Source provides you with direct access to all reseller applications for each of the suppliers in our network. Most wholesale suppliers will provide their applications directly on their website as well.

To apply as a reseller, you must have a reseller tax ID and a business bank account. Both are easy and very cheap to obtain, and are the first steps of starting any business. Legitimate wholesale suppliers will only work with legal business entities, so be sure to take the steps to obtain your local business license and reseller tax ID.

After submitting your application, the process could take anywhere from a few days to a couple of weeks. Large suppliers will assign you a sales rep, and that will be your contact for future questions, sales, returns, and any other business you have with the supplier. Smaller distributors will only have one or two reps for everyone, but the process is essentially the same.

You have your supplier(s)…Now what?

The next step is loading the products into your ecommerce outlets. You should have a general plan of how and where you will be selling these products. Inventory Source provides you with product information in various download formats for you to use on your website, ebay account, mall stores, or wherever you are selling your products. If you are using Inventory Source’s hosted ecommerce solution for your website, your products are loaded for you automatically.

However you access the products, you need to insert them into your website and marketing efforts. If you manage the information yourself, it is important to get images, descriptions, and all relevant information and organize it efficiently for selling. If Inventory Source is managing the information for you, the process is simple.

How exactly does the buying and selling process work?

Once you have your website up and running and filled with products from your chosen suppliers, it is time for business. When a customer buys a product from you, you will accept payment for the product for your retail price and shipping costs. For help with credit cards, see our “Guide to Merchant Accounts”.

Once you have received the funds, you place the order directly in your account at the distributor. This is typically either an email or an online order at the distributor’s website. You can see detailed information and instructions for each supplier in your Inventory Source account.

The distributor will then charge you for the cost of the item and ship the item directly to your buyer, and in most cases include your business name on the invoice, helping to build customer loyalty for your new store.

That’s it! You have just sold an item at retail and processed the order for your customer. From here, it’s up to you to plan and run your business.

VERY IMPORTANT!

There is no magic formula and you cannot sit back and watch the money roll in. A successful online entrepreneur is always developing a marketing strategy, maintaining a customer base, developing partnership relations, and constantly looking to expand. With some organization and the right tools, you can build a successful business from the ground up.

To get started you will want to read our How to Start Dropshipping Guide. This will outline what we discussed here in more detail and provide actual dropshipping examples.

See our other guides for making your website successful, marketing your site, accepting payments, and more. Inventory Source is here to help and can assist you with nearly all of the phases involved in building and running your business.

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