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Can drop shipping work for your online business?
If you resell products on eBay, you have your own home based
ecommerce website or you are looking for products to resell for a
profit, please take the time to read this, you'll be glad you did.
There is much discussion throughout usenet, chatrooms and forums about
drop shippers, and I have sat through many heated threads about the
subject. Many will tell you that drop shipping is a scam, it don't
work, you'll never make any money...But I know these things just not to
be true,
as I have talked with those doing it, work with those who do, and am
the webmaster of the site belonging to someone who manufactures and
drop ships his products. I have also used this method in the past.
First of all, using drop shippers is not a get rich scheme, or is the
answer to all of your problems, and, like any home based business,
requires some research and some work, but done correctly, can be very
profitable.
Let me explain the proccess in a nutshell.
First you decide what you are going to sell online.
You then find a drop shipper that carries the product. You place the
images and descriptions on your website or auction. When you make a
sale, you send the order on to your drop shipper, who in turn sends the
product to your customer. The profit that you make is the difference in
the price that you charge.
That is the process in a nutshell, but it is a bit more complicated
than that. Let me explain...
Deciding what to sell is one of the most important decisions that you
will make, and this is where many trying to get into the business
fail. You must take the time to research the market. This research
involves finding out these things...
1)Pretend for a moment that you have decided to sell remote controlled
coffee makers,(I am using this as an example, as one of these sounded
real good yesterday morning. Pardon me if I sound like your Junior
Achievement teacher in high school.)
and Is there alot of people selling these handy little devices? If
there is, this just might not be a good thing, as an oversaturation of
a product makes it difficult, or impossible market to compete in. You
can find this out by going to eBay, or to search engines and looking at
what others are doing. An over saturated market such as home
electronics is just about impossible to compete in, without cutting
prices, and right square into your profits. This is why someone selling
rolling pins or dog shampoo might just make a killing, while the guy
selling car stereo systems is not selling anything but a pretty cool
website.
2)Are there people actually buying Remote Controlled Coffee Makers?
One way to find out, is by going to eBay and looking at how many bids
and clicks that those who are selling these coffee makers are getting.
Of course there are many other ways to research this,such as market
research software, and I will get into these in a later article. There
must be a market to sell your products to, or you are just chasing your
tail. This part is called "demand". Demand for the product that you are
selling. This is why those home based businesses that are involved in
"niche markets" seem to thrive. Before you should start selling these
jumped up java makers, you should find out if there is a market of
people who will by them from you.
3)Where can you get these coffee makers. are you getting them from the
manufacturer or authorized wholesale distributor? If you don't you
might be getting ripped off. Research your Sources! Do they drop ship?
If not, then you will have to stock your inventory. You can save a grip
of money by doing this, if you have the room to do this. Buying in bulk
can save you money, if the shipping fees (do the research first!) don't
eat all of your profits. If you are just starting out on a shoestring
budget, then drop shipping might be your better bet.
4)Do the math!!! Figure in all of your costs! After you have decided
what to sell, you must figure what you are going to sell it for. Once
you have added in selling fees (if you are using auctions to sell), you
must consider shipping fees (if you are not using drop shippers),
taxes, and any overhead that you might have. License fees and hosting
fees, if you own your own site.
(I hope these things that I have mentioned here do not discourage you,
because these are the same things that you need to run any business. If
these things do overwhelm you, you might want to consider affiliate
programs for your first internet venture, as they cost nothing).
With all this considered, you should still be able to make a profit
with the product that you choose to sell. If the math don't add up to
profit for you, then you should find a different product to sell.
I have only touched on the basics here, but I hope that this article
has helped you to understand how drop shipping works.
Troy Breitmeyer
http://dropshippers-directory.com
About the Author: Troy Breitmeyer has been involved in affiliate marketing since 1996, has been interviewed on Chris Malta's "Common Sence Internet Radio", and is currently writing an ebook that is geared towards helping the new affiliate marketer. For more information , please visit http://dropshippers-directory.com
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