Thanks to the ease of the internet, online virtual businesses have become very popular business models. Online retail stores are gradually playing a more and more important role in the way we all shop and in many cases are taking over from the traditional high street shops. Over the last few years, a growing concept called ‘Drop Shipping’ has emerged alongside internet shopping.
The term drop ship basically means those wholesalers who are willing to ship their products directly to your customers thus saving you the hassle and expense of ordering and holding stock yourself. Drop shipping certainly has enormous benefits, and is an exciting option for the online retail community.
Since the concept has taken off online the drop ship business is now a very popular home-based business opportunity. On Ebay alone vast numbers of people are making a full or part-time living from drop ship companies, using the convenience of drop shippers to auction their products. Therefore with such positive options, the internet entrepreneur can hope to start a retail business now and still claim a portion of the ever-growing market share.
The drop ship model offers many advantages over being a wholesaler. For a start you don’t have to spend a fortune on the huge amounts of stock and storage space before you start an online shop; this means you have very low business startup costs. Another great advantage is that there is no risk of buying stock and then finding that you can’t sell it. Therefore, with the variety of products offered by your drop shipper, it becomes easy to test which products have a strong demand over the internet without losing a fortune on each test.
Another huge advantage of running a drop ship business is that there is no need to worry about getting products to your customers. You don’t have to provide storage space for your goods, nor do you have to incur warehouse costs. A good drop shipper should automatically take care of all the logistics and shipping for your enterprise.
In fact, the majority of proper drop shippers are more than willing to label their products with your company name on it, so it will seem as if you are the one who shipped the products to your customers. The shipping cost for each product is also reduced, because your drop shipper can ship your products directly to your customers. A higher profit margin is achieved because of the reduction in unnecessary shipping costs.
The other point in favour of drop shipping is that it allows you to sell high, then buy low, instead of the other way round. The risk involved in online retailing is dramatically lowered as you get paid up front for your products, making a profit on each sale. Also there is not usually a minimum quantity restriction on your orders. From your website catalogue, you can sell as many products as you want and you can leave the indenting of stocks to your drop shipper. The quantity of products which you can sell over your website is only limited by customer demand and your own marketing efforts.
Setting up a drop ship business is relatively simple. First of all you will need to do some targeted research on the web to establish which niche market you would like to enter. Once, a strong demand for your products has been confirmed, you contact the drop shipper of your choice and set up your business as an online store selling the products of your choice.
Following that you design and set up a website complete with product catalogue and credit-card-accepting functions, this is best done with aid of proper software such as Zen Cart. The product descriptions and images can normally be got from the drop shipper who is supplying you. After that comes the more difficult part; you need to drive large volumes of traffic to your website through internet marketing.
Plenty of visitors to your site will become customers if they find your offers are attractive enough. They then place orders and pay you the retail prices, up front. After that you email the orders to your drop shipper, who will then ship the products to your customers directly. What could be easier? Naturally, the retail price will have to be marked up to include shipping costs as well. Since the drop shipper charges you the wholesale price for their products, the profit margin you earn is simply the difference between the retail and wholesale price.
These days, internet shops almost always have a strong advantage over brick-and-mortar shops. Startup costs are usually very low, which is ideal for those aspiring entrepreneurs working on a shoestring budget. The costs for conducting a drop ship business will be mainly the software for setting up, hosting your site and marketing your business. The latter includes email marketing, search engine promotion software and possibly pay-per-click advertising. In most cases, the drop shipper will require you to pay them a small deposit to show commitment and to prevent fraud.
With the low startup costs for a virtual business, you can keep trying different forms of business or different marketing methods over the internet without losing a fortune on your efforts. You can afford to lose a little over many unsuccessful endeavors, but just one big winner will soon put your cash flow right again.
Possibly the most attractive draw of an online drop ship business is the ability to automate it so that it generates income on its own; this is largely due to using the right software to automate the business process. Therefore any properly set up drop ship businesses can run 24/7 without you having to be present physically to run it. This will give you the freedom to do whatever you want, wherever you want, without being tied to your business.
