Drop shipping! By Steve Moghadam
The English term for online sales without inventory, namely, drop shipping means getting the goods from the wholesaler/company/manufacturer and delivering it to the customer. In this method, you are a retailer but the one without any facility, physical structure, warehouse or shop.
In the real world, even if you want to launch a grocery store, you need to rent a shop and have enough capital to buy goods. However, in this method, you don’t need any capital for renting a place or buying goods because you are backed by the warehouse of another company. You just need to ship the goods to the end-users from the warehouse. Sometimes, the inventory of this warehouse includes millions of goods
In this method, in the first step, you need a website that can work with wholesalers’ systems rather automatically and support them.?
You post the wholesaler’s catalog on your website and when a product is sold, you buy it from the wholesaler and deliver it to the customer. You can copy the exact format of the corresponding company’s website into your website. Ready-to-use stores such as Shopify?(and many others named in the appendix) provide you with such platform.
The only thing you need to do is to register your request for an online shop in Shopify and pay a monthly fee. Since the market is pretty wide for online store builders like Shopify and the likes, dropshipping wholesale companies already have a list of their products in these shops in an exclusive and practical template. In your website, you can easily post for sale any of these templates that you want. In fact, you have nothing to do but to copy the list of the products and pay Shopify the monthly fee for your website.
Notice;
If your website is designed and lacks the general ready-to-use template, your web designers need to adjust your system to the format of these wholesalers.
If you decide to work as a broker between the wholesaler and the customer, you can choose between two models regarding the product selection:
The more specific your job in online sale, the more possible your success. Since you are focused on a specific section of the market, you can become a professional in that specific industry.
When you choose a larger market, the difficulty is multiplied, and you can never become an expert in your market. More importantly, your competitors are the largest global businesses and confronting them is almost impossible for newbies.
In the next step, you find a wholesale company that supplies the products you intend to sell. Since there are large companies, you can easily work with them. There is only one way to this: work in a specialized field or niche.?
Buyers prefer to buy niche products from niche shops not large stores that sell everything. For example, if the customer intends to buy a camera, he/she prefers to buy it from the website which exclusively sells cameras and related products. A niche website assures the customer that he/she can buy niche products from a professional vendor who?has a great knowledge of the product and provides better consulting and customer support services.?
In this method, the customer’s order is registered in the wholesale company and, at the same time, it is registered on your website. The wholesale company packs the corresponding product in a box with your website’s name well written on it. The wholesale company also puts your address as the vendor on the product. This method is called white labeling. In this case, the buyer assumes that you have sent the product and you have a warehouse full of products.
Regarding pricing the goods, you can put any price you want on the corresponding product. Do the pricing based on the target market and your pricing strategies. After the customer pays you, you pay the packaging and shipment fees to the wholesale company, and the rest is your profit.?
If you use smart methods, you can make a great deal of money by just selling one type of product such as toilet paper using this method. You just need to make it clear for the customers of a product that selling a niche product is your expertise.?
In the drop shipping method, you can have products as diverse as the products of large online shops because it’s free of charge and you post the wholesalers’ catalogue on your own website.
If your website design is suitable for this method, the website can connect to the server of the wholesale company and read the photos, videos, product Smart Online Money Making 19 information and price directly from that server; all of these processes are conducted at a very low cost. In this method, the only cost you pay is the fee for web design and possibly a small monthly fee for subscription and using the wholesalers’ systems.
You may wonder how the wholesalers allow their products to be sold with your brand name tagged on those products. The answer is the only thing that matters for the wholesale companies is sale
?This is absolutely in the wholesaler’s favor. It’s like you and other thousand people in the world are working for these companies as virtual vendors. You don’t have to pay for the inventory and investment and you can end up with a lucrative business without any large investment. Besides, the wholesale company doesn’t have to spend much on stores for distributing its products. The troubles of debt collection for the company are also totally eliminated.?
More importantly, the broker is also in charge of marketing and the wholesaler doesn’t need to advertise its products in the market because the broker is doing that out of his/her pocket.
In this method, only a few forces are assigned to work for support on behalf of the wholesaler, and the job description for these forces is limited to inventory management and accounting.?
In fact, the marketing for the wholesaler’s product is conducted with no cost using your resources, and the wholesaler only performs a part of logistics, packing and delivering the product.?
“Dropshipping” or sales with out inventory and stock is one of the best and most modern methods of business for both parties – both the wholesaler and the vendor.?
If the product is returned, it will go back to the wholesaler’s warehouse, and after that, the return policy will be applied. A set of rules are considered for managing the returned goods, and not every product can be returned.
You need to reach an agreement with the wholesaler in this regard and announce in your website the conditions for returning a product. In any case, you must set aside a part of the profit earned to compensate for the cost of lost money.?
There are tens of online applications and systems for syncing the ordering website and wholesale companies’ website. You can apply ready-to-use platforms of these systems because designing an exclusive platform costs a great deal and has its own drawbacks.?
Presently, Shopify is one of the largest platforms. You can own a website by paying a small monthly fee and you don’t have to worry about web design and production. The large wholesale companies have also designed their systems according to such platforms.?
Companies such as Shopify design a system for exchanging money, and you don’t have to deal with the bank directly. These companies receive the money and transfer it to your account after withholding the statutory deductions.?
The next step is shipping the sold product. In this regard, you can do the job using some modern companies such as DHL. Of course, you wouldn’t be responsible for shipping the product. These shipping companies connect to your website. After an order is received, the shipping company representative goes to the wholesaler’s warehouse on the given time and receives the product to be shipped. In addition, when an order is registered, various shipping companies announce their prices and the customer knows how much it will cost if the product is going to be delivered by, say, the USP company or the DHL company. The customer pays the fee for the product and the shipment, and the process of delivering the product starts. Shipping is an expensive industry with several complications. You need to prepare the infrastructures so you can succeed in this process
Nowadays, there are large shipment companies in every country and they easily ship and deliver the products in any geographical spot. According to the contract you sign with the shipping companies, every day at a specific time, the representatives of these companies receive the shipments from the wholesaler and deliver it to the customer. Therefore, there is no concern regarding product delivery, as well.
I emphasize again that you need to work in a specialized field or niche. Early after the Internet was invented, one of my friends showed me a list that contains names of hundred individuals who had become a billionaire using Internet. The interesting point was that one of these hundred people was someone who had become a billionaire by selling horse keeping gears. As simple as that! The reason behind it was working in a specific field
People who are interested in fashion industry can start virtual clothing sales. Nowadays, companies use a model like “the drop shipping method” and allow you to sell clothing with your brand without any inventory or renting cost.
You provide the clothing (model) specification, and after receiving the order, the manufacturer delivers the product with your label for the customer. Through this method, manufacturers use technology to sell their products. This is one of the best sales methods.
They allocate a section of the factory to this system so thousands of interested people can sell the clothes with their brand name tagged to it. This is a start for entering a business in clothing and fashion industry.
Wholesale companies are multi-million-dollar companies and their smallest warehouse is larger than about 100 thousand meters. Building such platforms is a huge move that creates hundreds of jobs and promotes economic prosperity. Furthermore, they transform old and worn-out distribution systems into modern forms.
Note:
Collaborating and affiliating with wholesale companies is one of the best ways to start making money online.
To make money in this way, you just need to prepare web-oriented software infrastructures based on inventory systems. Inventory requires complicated software tools and it’s costly, but the return on capital is high.
Overall, because of companies such as Shopify, it’s quite easy to launch a website in order to work in this regard. Nowadays, you can get a ready-to-go website by initiating Shopify tools and paying a small monthly fee without doing anything else!
This job has been a part-time job with limited income for many people. However, it has presently become a full-time job with lucrative income. To succeed in making money through this method, you need marketing. You can learn more about it by reading some of my other books titled ‘Smart Marketing’ and ‘Social Network Marketing’.