Drop
Shipping Your Way to Increased Profits
Drop shipping,
for those who are unfamiliar with it, is a system
whereby you promote the products of a particular manufacturer, take
orders directly, and the manufacturer/source handles all the inventory
and fulfillment functions for you.
In a nutshell,
here is the drop-ship system:
==>You
generate and accept the order.
==>You take
your profits out of the sale price.
==>You
forward the order and the wholesale cost to the drop shipper.
==>The
source factory ships directly to your customer.
The benefits
of this arrangement are probably obvious:
* No inventory
cost to you.
*
Substantially higher profits to you over what most regular affiliate
programs allow.
* The ability
to quickly set-up inexpensive, highly targeted, niche or mini-sites to
test and promote diverse products.
This
process has been around for years and has been responsible for many
highly successful mail order dealer relationships in the past. Many of
the top catalogers and other direct response marketers, have been using
this system to increase profits for decades. If you have ever ordered a
high priced item from a mail order catalog and been told that the
product was being shipped from the factory... then you have experienced
drop shipping first hand.
Drop shipping
is, I believe, a virgin un-tapped storehouse of profits for todays
internet marketer.
On-line
directories exist [http://www.dropshipprofits.com] which reveal
essential contact information for drop shippers of over 2,000,000
products and 4,000 brands. Most legitimate drop ship sources will
require that you have a state tax reseller number in order to approve
you to sell their products and give you the wholesale pricing you are
looking for.
Beware of any
drop ship source which requires you to
pay a fee in order to become a drop-ship dealer... or requires a
membership. These are generally organizations which make their money
selling "drop ship licenses"... and are, for the most part, scams.
Legitimate drop shippers and factory sources never charge you any fees
other than the actual wholesale cost & shipping costs of the
products you sell.
Another
caveat... always make sure that you
have a written agreement with the source factory that you own the
customer! The factory or drop ship source should agree in writing not
to solicit your customers in any form. This is very important to you.
Your customer list is one of your most important assets. If the factory
you are dealing with balks at this request... use another source who
will agree.
Almost every
conceivable type of product is available
from a drop shipper willing to ship products in single units under your
companies name. Pick your interest area... electronics, consumer
products, agricultural & industrial products, office equipment
& supplies, hobby gear, recreational / sporting goods, clothing,
furniture, etc. The list of available products from drop shippers is
almost endless.
The products
actual source is invisible to the
consumer. The seller (you) is able to build a database of customers
that he/she owns and controls (by agreement with the manufacturer) and
has all the direct marketing advantages that accompany that
arrangement... while eliminating the need for maintaining expensive
inventory.
This
arrangement offers maximum flexibility and cost
savings for the seller. If a product does not sell well online you can
pull the advertising (web page or mini-site) instantly with very little
cost to you outside of the actual time it took to build and test the
web marketing effort. Or, since this type of page/mini-site is so
inexpensive to maintain and host... you can simply leave the pages
online and take whatever orders trickle through... while you move on to
the testing and promotion of new drop ship products. A quick marketing
test can be done on eBay or other auction site to determine if the
product sells... and at what price.
The
manufacturer benefits
from this relationship by gaining a legion of active marketers
promoting their products... at little or no cost (other than those
small costs involved with supporting the marketer with online marketing
materials like product images, sales materials, etc).
As a
marketer you are looking for several key components in developing the
drop-ship relationship with a source factory or distributor:
** High
Quality Products
** Blanket
Product Liability Insurance (if applicable)
** A clear
guarantee and return policy
** High
Quality Marketing Materials ... product images (gifs, jpegs, etc.),
selling copy, other suitable web graphics, etc.
** A Customer
Service Department that will work with you to develop the best selling
situation for you.
If
you are a manufacturer seeking to expand distribution (or an inventor
with a new product ) you will find the willingness to drop ship in
single units will give you a strong competitive edge while you carve
out increased market share at little cost.
If you are an
online
marketer interested in offering high profit products to your niche
market (your website visitors) without incurring high front-end
development or inventory costs... then drop shipping is for you.
Internet
marketers are uniquely positioned to take profitable advantage of the
drop ship arrangement and should give this system a serious look.
(c) Copyright
2005 Thom Reece