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Drop Shipping Explained-The Nagging Questions

May 10, 2008
In this article you will find some of the most frequently asked questions answers about drop shipping. Check them out to get a brief description on drop shipping.

Q - What is the meaning of the word Drop Shipping?
A - Drop shipping essentially means that you conduct a trading business without maintaining any stock. You only forward the order placed by your online customer to your drop shipper who in fact, stocks that item and also ships it to your customer.

Q - What do I need to start this business?
A - A computer with an Internet connection, one or more drop ship wholesaler and a way to advertise the drop shipping stock under your company name like eBay or your own Website. Also get the necessary permits and license to run your business from the concerned authorities.

Q - How and when do I start making money?
A - You will have to add your profit margin to the rate of the product, which your drop shipper has quoted, before you advertise that product on the Internet.

Once you have accepted your customer order and collected the payment, you will have to forward that order and also make your payment to your drop shipper. The difference in your drop shipping rate and the rate at which you have sold the product is your profit margin. You start making money from your first order itself.

Q- How do I know what rate to quote for the product?
A- You can check out similar products being offered on the Internet. Then compare that rate with the rate offered by your drop shipper. You can then quote a rate based on this information.

Q- What do I do once I get an online order from my customer?
A- You accept the order and collect the payment from your customer via credit card or PayPal and then forward that order to your drop shipper, who in turn will arrange to ship that product to the address provided by the customer.

Q- How do I get hold of a drop shipper?
A- You can find them over the Internet or through sites related to eBay. You might have to become a member and pay a membership fee to get access to that list.

Once you get a list, then you can check out the drop shipping products line-up online. Choose a drop shipper who can also be contacted over the phone 24/7. Check out his reputation by contacting the manufacturer directly.

Q- What are the plus points in drop shipping?
A- You do not have to maintain any inventory. You also do not have to worry about dispatching your goods. The initial investment, overheads and the overall risk factor are very less.

Q- What are the minus points in drop shipping?
A- Your margins are limited since you have to quote on the rate that your drop shipper quotes to you. Your reputation could be damaged in case your drop shipper does not deliver on time or delivers products of bad or doubtful quality.

So, check out these facts before you decide to drop anchor at the drop shipping port.
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