The basic premise of drop shipping is that you (and many others like you) are acting as a distributed sales force for manufacturers and wholesalers who either cannot or don't wish act as retailers. You will become virtual distributors for them, while they handle the physical order fulfillment and shipping, only. As such, dropshipping is lucrative for everyone involved.
Though there are countless items available for dropshipping, it's easy to get carried away with the possibilities. It's best to focus on just a few very carefully chosen items to get started. Not only does this keep you from getting confused with all the items you have for sale or being overwhelmed with auction fees before you actually sell anything, but you'll also be able to evaluate the feasibility of each item on a small scale before you become dedicated as a well-known seller of Norwegian Cuckoo clocks, or some such.
The same is true of choosing a dropshipping partner to work with. Don't just pick the first one that comes along and meets all your criteria as far as their merchandise is concerned. Shop around and find a few that will give you the best possible deal. Then, evaluate their performance before making any type of long-term commitment. It is, after all, likely that legitimate dropshipping partners will be evaluating your performance, too.
When doing business with manufacturers, it is very likely that they'll ask you some perfectly legitimate questions about your business, such as your Tax ID number. In the US, this means you'll be doing business as a Sole Proprietorship (until you register with your state as something else). As such, your Tax ID number is your Social Security number. Though this means you'll be personally liable in the event of trouble (unless you incorporate with the help of at least one and usually two other people), it also means that you can get right into business without filing any forms with government officials.
Finding Good Manufacturers And Wholesalers To Do Business With
Perhaps the hardest part of getting started with dropshipping is finding good companies to do business with. There is certainly no shortage of fly-by-night companies and scam artists who have sprung up in recent years, trying to take advantage of the many thousands of people who also hope to supplement their income without spending a bunch of money up front. This lure is so very strong that you need to be very careful when selecting dropshipping partners to work with.
There are a few that have been "approved" by eBay, but you'll quickly find that their entire product catalog is already well-represented on eBay by a large number of other dropshippers. No, it's in your best interest to do your homework and find drop shippers to work with on your own. Otherwise, you're sure to be operating on razor-thin margins that are just as likely to loose money in the long run.
Not all dropshippers are alike, even when selling the same items. When you do find companies that are willing to do dropship work with you, find out how long they've been in business and how long they've been doing dropshipping for clients. You may be the first test case of a company that's been in business for a long time. While there are great potential rewards for those who go into partnership with start up companies, you need to know the risks - it could be a very bumpy ride with a very new business
Ask very pointed questions and evaluate the timeliness and professionalism of the responses you get. Companies that are able to respond to your questions in a quick, forthright manner are the same ones that will be able to jump right on an issue when a problem or dispute arises. They should also be able to tell you, in no uncertain terms, exactly what products they sell, if not all of them, are available for dropshipping.
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