How to Make Drop Shipping Work - Navigate with Price

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Many people want to start an e-commerce drop shipping store so they can work for themselves. Unfortunately, there are various products to buy online, which make it difficult for someone to pinpoint what to sell.

I helped my husband start an online business over ten years ago. We shipped smaller automotive parts we could buy in bulk. We drop shipped the larger items that were too heavy to reship at a reasonable price.

Drop shipping is a fast and convenient way to make money. I've put together some pointers to make drop shipping work for you.

Make Drop Shipping a Benefit

Do not forget when you decide to drop ship items you want to make sure that the item you sell is cost-effective. For instance, my husband and I drop shipped large objects like headers and exhausts to keep shipping costs low.

However, sometimes the manufacturers or third-party distributors you purchase from may incorporate additional drop shipping charges to you as a dealer.

Don’t Drop Ship Small Goods

You can find small items for a cheaper cost when you buy in bulk. Numerous companies will offer lower shipping costs for merchandise bought in bulk.

Manufacturers will also offer free shipping if you purchase up to a specific dollar amount. Buying products at low cost or free shipping allows you, as a dealer, to ship the item faster and sell the item at a competitive price.

Customers like getting their purchases within a week. Instant gratification is what buyers are looking for.

Manufacturers “Buy-In” Amount

If you are cutting out the middleman and going straight to the manufacturer for products you may be expected to buy in with the company.

The manufacturer will stipulate in their reseller or dealer paperwork they require a buy-in amount on the first order. For example, if you decide to buy cleaning products for vehicles, your first order may require a $6,000 buy-in amount.

The manufacturer is fully aware you are attempting to resell their product and name; therefore, they expect a large purchase up front. The buy-in tells the manufacturer that you are a serious buyer and you will be back for more products.

Make a Profit

Working for yourself is all about making money as a small business owner. Manufacturers and third-party distributors often have tiers for you as a dealer.

Manufacturers and distributors may only offer the dealer a tier 1 discount until the dealer reaches a higher selling status. After so many products are acquired by the distributor, the dealer will be given a tier 2 discount.

Some manufacturers and distributors offer a wholesale discount if the dealer buys a sizeable amount of their product.

Always – Always Calculate Your Profit

Make sure you are receiving enough gain for your time and efforts. Drop shipping can be easy, but if you are selling 20 – 100 items a day you will be putting in lots of work.

Some people are happy with a 10% profit. Try to shoot for a 15% – 20% profit that way when you offer sales or discounts on holidays or promotional days you are still clearing enough profit to keep going.

As you continue to work with your manufacturers and distributors, the discounts will grow as your business grows.

Getting Started

Create an e-commerce store online with a company like Shopify to get your drop shipping business started.

Shopify offers a free trial and partners with various apps to help you sell online. They also work with Pinterest, Facebook, and Instagram to sell on social media.

Be sure to look for manufacturers in your niche and inquire about becoming a dealer. Most manufacturers will be happy to share pictures and descriptions for your e-commerce store.

Good Luck!

Definitions:

Manufacturer – a person or company that makes goods for sale.

Distributor – an agent who supplies goods to stores and other businesses that sell to consumers.

Dealer – a person or business that buys and sells goods.

Reseller – a person or company that sells something they have bought to someone else.