List Categories | List All Articles | List Articles By Title
Working With Drop Shippers
Drop Shippers, the manufacturers or distributors who are willing to ship their products to your customers, bring a powerful benefit to ecommerce. Online businesses that engage in the wholesale-retail trade can cut down on all the hassles of shipping their products by simply establishing business relationships with drop shippers, and using them as part of their business model. This article will cover the aspects of selecting a reliable drop shipper, the process of setting up with drop shippers, and also some of the common problems that may arise from working with drop shippers.
Selecting a reliable drop shipper is a very crucial element in your drop shipping business. If the drop shipper you work with is honest and reputable, you can consider yourself to have won half the battle in the order fulfillment process. Although this may not be true in some circumstances, the direct manufacturers and the upper level distributors are usually more reliable than the smaller distributors. Manufacturers usually produce their products in large quantities, and require higher capital to finance their companies. More often than not, these businesses are reliable companies, because only businesses with a strong track record have the ability to secure such high capital to finance their manufacturing process.
Also, first and second tier distributors are usually reputable as they are bigger and more established, since their distribution spans a wider region. This is in contrast with lower tier distributors or middlemen, who make their profit simply by marking up the prices. Some low-tier distributors may be fly-by-night organizations or businesses that may shut down easily due to their small size. Hence, whenever possible, you should look for the direct manufacturers or distributors of the products and ask if they offer drop shipping services, due to their reliability. Direct manufacturers or distributors should also be your first choice because their prices have not been marked-up by any middlemen, and thus the higher your profits can go.
(This is not to say that smaller distributors are unreliable, there are also numerous honest distributors out there with established track records.)
Simply phrased, the drop shipping process is as such: You set up a website catalogue selling the goods that you want to sell. After a customer has placed an order on your website, you can call or email your drop shipper to deliver the specific quantity of products to your customer. Your drop shipper will then ship the products to the mailing address as specified on the order form.
When selecting the products you want to sell, you have to also consider the shipping costs involved. If your drop shipper and your customer base are located in different countries, you should definitely sell products which cost in the price range of hundreds or thousands of dollars, so that the higher international shipping fee would account for a smaller proportion of the retail price of the product. If your drop shipper and your customer base are located in the same country, it would then be feasible to sell products that are cheaper as the shipping costs are much lower.
So how should you go about looking for your product suppliers? The first approach you can take is through the search engines. You can start off by searching for 'Manufacturers directory', 'Wholesalers Directory', or 'Drop Shippers Directory', and look through the websites containing the lists of such manufacturers. Alternatively, you can type your product keyword together with the word 'wholesale'. For example, if you want to sell wooden carvings, you may want to try the term 'wholesale wooden carvings' and take note of the websites offering wooden carvings at a wholesale price. After which, you can email or call the manufacturer and check if they offer drop shipping arrangements. Or, if they offer the function to sign up for their drop shipping service on their website, you can immediately sign up for it, but only after verifying that they have a record of excellent and ethical service. (You can do this the easy way by browsing their website. Most of them will display the awards or commendations they achieved for excellence and reliability.) A good example of a wholesaler that offers drop shipping registration on their website is http://www.artinternationalwholesale.com. The drop shipping service can be found on the left navigation bar under 'Wholesalers'.
Remember to target manufacturers as your first choice. You can find a directory of manufacturers and distributors at http://www.thomasregister.com. If you cannot find any manufacturer offering drop shipping services, you should then target the direct distributors one level below the manufacturers. Their prices would have only been marked-up once, and hence the lower your cost. You can locate these distributors by getting the manufacturer to recommend some of the more reliable ones. If none of these first-tier distributors offer drop shipping, you then move on to the second-tier, and so on. However, it is not advisable to go on to the lower tiers, as your profits will decrease.
Although manufacturers or direct distributors are large companies, some of them may not have an established website. You can still contact them by calling them or sending them a mail. I would recommend that you call them personally so that there is more room for negotiations, and also a warmer 'touch' to the business relationship.
Before calling your drop shipper directly, you will need to establish your business as a legal entity before starting any business trading. Registering your business with the government involves getting your Tax ID number, and also your official business name. You can contact your state's administration and find out how to register your business. U.S. citizens can get a lot of resources and information on registering a business at http://www.sba.gov.
After your business registration is done, you can start contacting your drop shipper and negotiating with them. There are several important issues that you have to discuss with them:
1) Shipping. Most of the companies outsource the delivery of their products to a delivery service like FedEx or UPS. Once you email a customer order to your drop shipper, you will need to be able to keep track of the status of the delivery. If any customer were to query you on when the goods are to arrive, you will then be able to account for them fully. Established delivery services like FedEx offer online real-time tracking services. With the tracking numbers issued by the services, you can log on to the internet to track the delivery status of the goods. Alternatively, you can choose to include the tracking number in the email autoresponders sent to your customers, so that they can log on to the FedEx or UPS website to track the shipment.
You would also need to find out what is the delivery service that your drop shipper uses, and calculate the shipping costs. Shipping costs within a country should be significantly lower than international shipping, thus it is advisable to select a drop shipper based in the country where most of your customers are. This not only cuts down a lot on shipping costs, it will also reduce the hassles of international shipping like customs security and slow delivery time. Additionally, lower shipping costs would encourage more purchases from your customers, as compared to cases of international shipping where the high shipping costs can sometimes account for up to half the price of the goods, deterring them from making purchases.
Usually, the logistics department of the drop shipper is willing to label their products with your company name and logo, so that it will appear as if you were the one who shipped the products to your customers.
2) The wholesale price of their products. Although this would not vary much among manufacturers of the same products, some manufacturers do offer a slightly lower wholesale price than other suppliers for the same product quality. It would pay off much in the long run if you scout around for wholesalers with lower price, as you would make a bigger profit on each sale. You can also negotiate among several wholesalers first because some wholesalers allow greater room for negotiation than others. If your online businesses can have a guarantee of selling a large quantity of products, you should be able to get a lower price for them, similar to the discount given for bulk purchases.
3) Credit and Billing. You would have to make clear with your drop shipper how you are going to pay them, whether it is by credit cards or by checks. Will the payment be made immediately after each purchase of goods, or will it be paid after a certain minimum quantity of goods is purchased, or will it be paid at the end of each month? These details may appear trivial, but it is important to clarify all this at the start to prevent disputes later.
4) Product Return Requests. Because your customers expect their products to be of a pretty high standard, your drop shipper will need to guarantee you a certain standard of product quality, and be willing to replace any defective products. Be wary of drop shippers that do not offer these guarantees! If it turns out that many of their products are defective, then your reputation is at stake, and you would end up with many useless defective products. Clarify the process of returning defective products. You may want your customers to return the products directly to your drop shipper, instead of sending the products first to you, then from you to the drop shipper.
An agreement with your drop shipper on their refund policy should be finalized. If they do, you need to determine whether the funds are to be transferred first to you or directly to the drop shipper.
In conclusion, the process of establishing a business relationship with a drop shipper can be quite complicated. However, if many of the details are clarified right before any transactions are made, your online business should be able to handle all the hassles smoothly.
*You are welcome to reprint this article as long as you include the Author's resource box with the article.
About the Author: Ray Yee is the founder and president of Dropshipperscentral, a website which provides a wealth of informative articles, tips and resources on everything you'll ever need to know about setting up a Drop Ship Business and marketing it. Click here for the Wholesale Drop Ship Directory from http://www.dropshipperscentral.com
The Rise of Multinational Virtual Corporations
The virtual corporation is the emerging organisational form, which best combines, a fluid ability to adapt to rapidly changing markets and is able to leverage its skills with the complementary skills of other corporations. In the concept's purest form, each company that links up with others to create a virtual corporation will be stripped to its essence.
Saving Money On Your E-commerce Site
After building and transferring many e-commerce sites it still amazes me that owners of e-commerce businesses are still wasting money in three basic ways. For fear of stating the obvious, saving money is the same as making money $100 saved is $100 added to your profit margin.
Writing Web Pages: Get To The Meat Faster
Much of my consulting work comprises writing 'Outside Opinion' reports on the sites of large companies and organizations. Sometimes I review just a few pages, sometimes fifty or more.
7 Must Have Scripts to Look for When Shopping for E-commerce Hosting
When shopping for e-commerce hosting there are a lot of things you need to keep and mind. When you know what to look for it is a lot easier to ensure you get exactly what you need and not leave any important information out.
Creating The Perfect Ecommerce Website
If you're thinking of jumping on the bandwagon and going into business with your own ecommerce website, you'd do well to look at a few examples before you start. Finding out what a good ecommerce website looks like will help you know what to include - and what to avoid - when you start to set up one of your own.
A Tale of Two Revolutions - Ecommerce: A Historical Perspective
The World As It Then WasThe dynamic economic growth of the late 19th century placed greater and greater demand on horses to deliver manufactured goods between train and local destinations. Horses pulled stagecoaches, buggies, omnibuses, cabs and even shipping barges in canals.
To conduct business on the Internet, whether informal, one-time only transactions between two friends, or a full-fledged business selling products or services, payment arrangements have to be made. Before 1998, this often meant either checks sent through snail-mail, or very expensive, and often hard-to-obtain, merchant accounts for online credit card processing.
10 Second Internet Person, sound familiar?
Some people do not understand the Internet idea of online commerce, but then again some people do not understand themselves either. To fully understand Internet Commerce you really only need to monitor your "clicking habits" for a few days to see where you are going and what if anything you are buying.
How To Implement E-Business Solutions Successfully
Pitfalls of E-business solutions installation processA large distribution company has decided to use a new online supply chain management solution. The people - those who were supposed to use the system - were quite skeptic about the ability of the system, as they did not have enough knowledge and had very little or no training in using a similar system.
E-Commerce Is Back On The Fast Track
How much holiday shopping did you do on-line this year? If you are reading this, then chances are good that you made at least one purchase on-line. Over 54% of all Americans did it .
How To Sell Your Products Online?
E-commerce is gaining pace! Research firm eMarketer predicts that 2003 will see online sales reaching US $58.2 billion excluding travel.
Online Credit Card Processing - How to Accept Credit Cards - Ecommerce 101
Back in 1998 (through 2000 or so), I worked for a small company (called PaymentNet / then Signio) that handled online transactions. Verisign later purchased this company, and the product team I led integrated the "client" - the portion that took the credit card information and sent it to our servers for processing.
How E-commerce Web Site Design Differs From Normal Web Design
When it comes to e-commerce everything is a little bit different, even the web site design for an e-commerce site as compared to a normal web design. If you are interested in developing an e-commerce site, then it is important to learn about the differences between the two types of website designs and how you can design the best e-commerce website with your resources.
How To Prevent Your 3rd Party Merchant Account From Suspension
What would you do if you were sent an email from your online credit card processor telling you that your account has been suspended or frozen? How are you going to pay the bills in the meantime? It is extremely important for you to familiarize yourself with the terms of your contract with your credit card processor. As long as you comply with their set regulation and guidelines to maintain your account in good standing you should have no problems.
Working With Drop Shippers
Drop Shippers, the manufacturers or distributors who are willing to ship their products to your customers, bring a powerful benefit to ecommerce. Online businesses that engage in the wholesale-retail trade can cut down on all the hassles of shipping their products by simply establishing business relationships with drop shippers, and using them as part of their business model.
How To Accept Credit Cards Online
Anyone with an online business, whether for auctions, services, or virtually any type of product, has asked the same question at some time during their quest to create the ultimate online business - "How do I accept credit cards?"Since over 90% of all transactions on the Internet involve customers paying by credit card, accepting plastic money rates a must for almost any business.The problem for most small online business owners involves the high cost of setting up and maintaining a credit card merchant account.
Alternative E-Commerce Solutions
Over the past several years, the Internet has emerged as a breakthrough technology that has and will continue to transform the way we live and communicate, and especially the way we do business.No matter if you are selling a product or a service, the Internet is a means of reaching markets that had otherwise been unreachable in the past.
Chinas Online Shopping May Be Booming In The Next Few Years
Data from China Internet Network Information Center (CNNIC) shows that till June 2004 Chinese online user has reached 87 million, of which, 7.3% has experience of online shopping.
Is Your Website Credit Card Friendly?
In my last column I discussed the process of credit card enabling your brick-and-mortar business. I pointed out that research has shown that accepting credit cards can help increase revenue and enhance cash flow.
E-gold is a digital currency, used extensively on the Internet for making payments in exchange for goods and services.It is one of the first digital e-currency providers, having started in 1996.
home | site map
All articles are copyright to their owners.
Note: this website lists articles, We do not Write Articles !