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Thursday, 11/20/2008

Wholesale and Drop Shipping

Drop shipping is a quick and easy solution that can get you up and running fast, but you have to do it right. When you drop ship products, you essentially have an arrangement with your wholesale supplier where they ship your orders directly to your customers. In most cases, they will include your company name on the shipping labels. Some wholesalers provide this service for free while others charge a nominal fee for it.

Here are some of the advantages to wholesale drop shipping:

• You get customer orders before you buy them from your suppliers. This means that your initial investment is minimal, and in some cases none.

• No inventory to hold. You don't have to pay for storage fees, or invest in expensive merchandise that might sit around for a long time before it is sold.

• You can diversify your offerings as much as you want. You are only limited by finding the right drop-shippers for the merchandise you want to sell.

There are also some problems to consider:

• A lot of scam suppliers. This is a big problem. You have to watch out when choosing your drop shippers.

• Inventory backorders. You might get an order for a product that is out of stock.

• Smaller profit margins.

• Customer service and returns. Your customers don't know your suppliers. When they have a problem or request a refund, they will contact you.

• You cannot control the quality, shipping times, or customer service of your suppliers.

Should you forget about drop shipping? No, but it must be done right. It can be a very effective strategy. If you are just starting out and don't have a lot of money, drop shipping could be the way to go. That doesn't mean that you jump at the first drop shipper that comes your way. You need to do your research and find good quality products and legitimate wholesalers.

In conclusion, study your market and choose your products before you begin selling a single item. If you are on a tight budget, then consider drop shipping your products using reliable and legit wholesale suppliers.