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Start a Business with Drop Shipping, Part 1

Written by Russell Cragun on October 7, 2014 in How to Sell Products Online
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Drop shipping businesses have been increasing in popularity, though the concept is still relatively new in the world of online business. Drop shipping businesses are an exciting prospect for people looking for either a full-time or part-time work experience because they require little start-up costs and can become quite profitable. If you are thinking about beginning a drop shipping business, you might wish to consider the following tips before launching into this new endeavor.

 

Understanding the Concept

Before you plunge into the world of drop shipping, you should have a good understanding of the concept. Unlike many online businesses where the business owner purchases wholesale merchandise to resell, the concept of drop shipping does away with this notion. Drop shipping businesses do not pay for merchandise until they sell it. Once they receive payment from their customer, they can pay the supplier who then ships it directly from the warehouse. The business never has to house or ship the items they list for sale in their inventory. Instead, they partner with a supplier and warehouse that handles their side of the arrangement.

This model allows businesses to focus on marketing, customer service, and website management rather than becoming bogged down with warehousing and shipping the physical merchandise. Also, this model diminishes the risk for the drop shipper. There is no chance of getting stuck with unwanted merchandise and taking a financial hit for it. Moreover, business owners set the retail price, find the buyers, contact the company once the order is placed and they ship it. It's a convenient and profitable arrangement.

 

Training or Education

Having a degree or experience working in business is certainly helpful for entering the eCommerece industry. On the other hand, if you have initiative and are willing to learn as you go, you can be just as successful as someone formally educated. Having a marketing background or experience with customer service can also be helpful.

 

Basic Start-up Tips

When launching your online business, you'll need to obtain a taxpayer ID and business license so that you can operate as a legal business. You will also need a website. The website is essentially your storefront, so you will need to make sure it is attractive, functional, and easy to navigate. Don't worry if you're not a savvy web designer! There are many inexpensive online services that give you the ability to build a website for you using templates that you can pick and choose from. This collaborative process can result in a high-functioning website that can become the basis of your drop ship business.

You will also need to consider what you want to sell. Since you'll be spending a lot of time marketing this merchandise, it's a good idea that you enjoy researching these products and are knowledgeable about them. Many drop shipping businesses prefer to work with a drop ship network that supplies them with a "drop ship catalog" of merchandise and suppliers. Becoming a network member allows you greater access to all types of product lines.

This is the first part in a three part series on starting a business with drop shipping.

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