Drop Shipping- What Is It and How Does It Work?

Do you like the idea of making money on eBay, but not the idea of having to package and ship products? It is possible to make money on the popular auction site without handling an actual product.  How?  By having items drop shipped!

Drop shipping is an arrangement whereby you get orders for a company's products, collect the money, then send the customer's order and the price you pay for it to the company.  You keep the profits, and the company sends the product directly to your customer.  It's that simple.

How Do I Get Started With Drop Shipping?

There are lots of companies that will drop ship products for their distributors.  You can find them by doing an online search for "drop shipper".  You may also be able to get recommendations from friends or business contacts.

It's important to do some research on any company you consider becoming a distributor for, and this is especially true if they will be drop shipping the products.  If they don't deliver the items as promised, you are left holding the bag.  So it is a good idea to check the company out with the Better Business Bureau before signing up with them.

If everything checks out and you decide to become a distributor, you'll need to make sure you meet their requirements.  Most require that you have a wholesale license in order to get the best prices, and some have further requirements.  Some also put restrictions on how you can promote their products, so be sure to read the fine print.

How Can I Sell the Products?

Most drop shipping companies will allow you to sell on eBay.  When selling on eBay, it is important to make sure you make enough money from each sale to cover your costs.  This requires a clear understanding of the company's shipping and handling charges, as well as how much you will be paying for the items themselves.  Setting your starting bid at a price that will ensure a profit is crucial.

You can also set up your own website to promote products in most cases.  If you don't want to do it yourself or hire a web designer, many drop ship companies offer website packages to their distributors.  Some companies offer mail order as an option as well.

Getting the Best Prices

Some drop ship companies offer products to all distributors at the same price.  But most give discounts to distributors who have higher sales volumes.  This results in more money for both the company and the distributor.

Some companies charge monthly fees for membership in their drop ship program.  Others offer free memberships, but give bigger discounts with paid ones.  It is up to each seller to determine whether or not these fees are worth it to him.

Many eBay sellers do very well with drop shipping.  It gives them a way to make money without physically handling the products.  If you are considering eBay but would rather not deal with inventory, drop shipping could be the answer you've been looking for.

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