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Dropship Your Way To Ebusiness Success


Q: I would like to start my own eBay business, but I really don't want to invest in a ton of inventory until I can get a better handle on what might or might not sell. I read another column about dropshipping, but I'm still a little fuzzy on how the whole process works. Do you think using dropshipping is a good way to start an eBay business and if so, how do I get started? -- Candace M.

A: Dropshipping is a topic that I first addressed in my column way back in April, 2003, which is decades ago in Internet years. But with the continuing growth of eBay and it's positioning of itself as a viable way for anyone looking to launch an ebusiness, the topic of dropshipping is now hotter than ever. It is also now more misunderstood than ever.

Dropshipping has been around since Sears first started selling goods from its mail order catalogs over a hundred years ago. However, the idea of dropshipping still confuses many people who don't understand exactly how the process works.

By definition, dropshipping is a method of selling and distributing goods wherein the distributor or supplier of the product (the dropshipper) ships the product directly to the end user (your customer) on the retailer's behalf (that's you).

The process of dropshipping involves three parties who take a product from manufacturing to market. They are a manufacturer, a distributor, and a reseller.

Let's use a blue widget as a sample product to demonstrate the process: Blue Widget Manufacturing (manufacturer): This is the company that manufactures blue widgets. Blue Widget Manufacturing does not sell directly to the public or supply the retailers who ultimately sell the blue widgets to the end user. They prefer to use distributors to handle the task of taking their blue widgets to market. Blue Widgets sells blue widgets by the truckload to distributors who pay $5 per blue widget.

A1 Distributing (distributor/dropshipper): A1 Distributing is the company that purchases blue widgets in bulk from the manufacturer and supplies them to resellers at a cost of $7 each. The distributor does not ship blue widgets to the reseller, but ships orders directly to the reseller's customers as the widgets are sold.

Big Bob's eBay Widget Store: Big Bob sells blue widgets to the public from his eBay store. Bob orders the blue widgets from A1 Distributing as he sells them (usually one at a time) and has A1 ship the blue widget directly to his customer. Bob sells blue widgets to the public for $10 each, which means that for every blue widget sold he nets $3.

How The Process of Dropshipping Works

Here are the seven steps involved in starting a dropship ebusiness:

STEP 1: Choose A Product To Sell

The very first step in any sales process is deciding what product to sell. There are many factors that should be considered before deciding on a product to sell, but for now let's say that you decide to sell CD players on eBay.

STEP 2: Locate A Supplier Who Will Dropship For You

Using a research tool like Google, Thomas Register, or an industry-specific resource like The Ultimate eBay Dropship Power Pak, you search for and find a company who will dropship CD players for you. The company offers you a 35% mark up over cost, which means that they will supply the CD players to you for $100 each and you should be able to retail them for $135. You make sure that the dropshipper has a good stock of CD players on hand so you don't end up selling a product that must be back-ordered.

STEP 3: Set Up An Account With The Dropshipper

You contact the company that can supply the CD players and set up a reseller account with them. This can often be done online or by phone, but some companies will require that you complete and return a reseller application to open an account. Some companies may also require a tax ID and business license.

STEP 4: Advertise The Product For Sale On eBay

Now that you have your supplier lined up and know that the product is in stock, it's time to make a sale. You advertise the product using an eBay auction. Since you know what you must pay the dropshipper for the product, you know what the minimum amount you will take for the product. In this case you start your auction at $100 since that is your cost. If you are confident that you can get more than $100 for the product you can start with a lower price, but remember that if the product goes for less than what it costs you to fill the order, you will lose money. Also remember that the dropshipper will charge shipping, so you should figure that into your sale.

STEP 5: The Product Sells

Great news: your CD player sells for $135 and your customer pays you with a PayPal instant payment. I highly recommend that if you are selling on eBay you use PayPal or some other online processor to accept instant payments. This allows the customer to pay you faster, which lets you place the order with the dropshipper faster, which gets the product to your customer faster.

STEP 6: Place The Order With The Dropshipper

After your customer pays you, you should contact the dropshipper immediately to order the product on your customer's behalf. The dropshipper then ships the order to your customer under your company name and address.

STEP 7: Follow Up After The Sale

This is where many new ebusiness people drop the ball. Just because your customer has paid you and you've placed the order with the dropshipper does not mean that you are out of the loop. Quite the contrary, if there are problems with the order you are the one that will be held responsible in the eyes of your customer.

Be proactive in your customer relations. Follow up with your customer to let them know that the item has been shipped. Offer yourself as the personal contact for any issues that may arise. This is also a great way to sell that customer more products. Invite them to check out your eBay store or website if you have one.

Many people are afraid to use dropshipping as a method of sales due to the horror stories that fill the Internet about unscrupulous dropshippers who take the money and don't fill the orders, merchandise that is eternally back ordered, unscrupulous middle men posing as dropshippers, etc. Make no mistake, the dropshipping industry - like most other industries - does have its share of shady characters who would rob you blind given the chance, but there are also hundreds of honest dropshippers who can help you build a profitable eBay dropship business.

Dropshipping is a complex topic that can't be completely addressed here. For that reason I have written a detailed report on dropshipping that is available to Entrepreneur.com readers for free. Small Business Q&A is written by veteran entrepreneur and syndicated columnist, Tim Knox. Tim's latest books include "Small Business Success Secrets" and "The 30 Day Blueprint For Success!" Related Links: http://www.smallbusinessqa.com http://www.dropshipwholesale.net


TODAYS NEWS BY OFFICEJAX FREE ADVERTISING AND AD EXCHANGE SOLUTIONSMORE RESOURCES updated Fri. December / 13 / 2019

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Babe Ruth's 500th home run bat is expected to fetch more than $1 million at auction  CNBC

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Brazil delays two major rail project auctions until third quarter 2020  Reuters

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The bat Babe Ruth used to hit home run #500 up for auction in California  The Mercury News

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Longtime York restaurant headed for auction block in 2020  York Daily Record

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Marshalltown auction sheds light on 500 antique lamps  KCCI Des Moines

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Boats, buses and boxes of evidence: Utah cities auction off odds and ends, 400-plus vehicles  KSL.com

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A 1937 Mercedes-Benz 540K, Kept in the Same Family for 50 Years, Heads to Auction  Barron's

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Princess Diana's 'Travolta dress' sells for $290G after auction flop  Fox News

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A Ford GT and Ferrari Testarossa Lead RM Sotheby’s First Online-Only Auction  Robb Report

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Big Oil's Wishlist The Hottest Oil Auctions In 2020  OilPrice.com

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Sanborn Classic Car Dealer Taking Cars To Sell At Barrett-Jackson Auction In Scottsdale  KIWARadio.com

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Next Brown County FFA Auction set to celebrates its 10th year  The Clermont Sun

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For Auctions, It’s ‘No Froth,’ but ‘Steady.’ That’s the New Normal.  The New York Times

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Serena Williams' smashed racket auctions for $20k after ball boy sold it for $500  Face2Face Africa

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Real estate pro shares insights on West Ridge Mall foreclosure auction  The Topeka Capital-Journal

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A Minor Change Freeze for FM Auction 106  Radio & Television Business Report

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Princess Diana’s iconic ‘Travolta’ dress has sold at auction  harpersbazaar.com

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Artist Cassi Namoda Shares Her Favorite Artworks From Our California Cool Auction - artnet News
Artist Cassi Namoda Shares Her Favorite Artworks From Our California Cool Auction  artnet News

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George Brett Signed 'Pine Tar Game' Jersey Will Hit Auction Block in February  Sports Collectors Daily

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Sicilian Homes Went Up for Auction Starting at €1. More Than 100000 People Called.  The Wall Street Journal

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All eyes on China as Russian firms seek return on crab auction investment  Undercurrent News

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- Rosneft Wins Auctions for Three Blocks...  Europétrole

Jack Nicklaus' Rolex sells at auction for $1.2 million - Golfweek
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Big Rapids hotel up for auction, bids up to $4.25M  MLive.com

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US wine buyers turn to auctions to dodge Trump tariffs  Financial Times

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History up for sale at Limpert Bros. liquidation auction set for Saturday  The Daily Journal

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The 9 Most Expensive Disneyland Items Recently Sold at Auction  Inside the Magic

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DNR to auction public land in 'prime locations' throughout Michigan  MLive.com

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Westminster annexing former Livestock Auction, site planned for 40 workforce housing units  Baltimore Sun

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RES equipment auction set for Saturday  Wooster Daily Record

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Buyer returns Grease jacket to Olivia Newton-John after auction  BBC News

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Hospice Auction exceeds lofty goals  Pamplin Media Group

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Gavel will drop one last time at Suess Auctions  PostBulletin.com

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Former United Methodist Village property to be put up for auction  WTHITV.com

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Community Matters Cafe hosts gingerbread house silent auction  South Charlotte Weekly

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IPL auction at a glance  The Hindu

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Fate of beloved East Side grocer to be determined at auction  Madison.com

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Should I buy a car at an auction?  Boston.com

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County's auction of admin building unsuccessful, new auction held through Iron Horse  Richmond County Daily Journal

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Contents of abandoned Arizona safe deposit boxes go up for auction  KTAR.com

Record prices but dismal sell-through rates at Middle East auctions - The ClassicCars.com Journal
Record prices but dismal sell-through rates at Middle East auctions  The ClassicCars.com Journal

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Shrewsbury nets almost $1M at tax delinquency auction  Worcester Telegram

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Michigan to auction 150 parcels of public land - The Detroit News
Michigan to auction 150 parcels of public land  The Detroit News

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Vintage Marvel Comics book sells for record $1.26 million at auction  Reuters

Mack Auction Company wraps up another busy year of farm auctions - Estevan Mercury
Mack Auction Company wraps up another busy year of farm auctions  Estevan Mercury

Gold bars, jewelry for auction of unclaimed safe deposit boxes - 12news.com KPNX
Gold bars, jewelry for auction of unclaimed safe deposit boxes  12news.com KPNX

Bankruptcy auction held at former Union Agway - By Stephen Betts - Courier-Gazette & Camden Herald
Bankruptcy auction held at former Union Agway - By Stephen Betts  Courier-Gazette & Camden Herald

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QC auctions $9.5million wine collection  RollOnFriday

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Alex Rodriguez's Bat, Ball & Uniform From 600th HR Hits Auction Block  TMZ

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Big money from RM Sotheby’s online F1 memorabilia auction  RACER

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The Art Market — comedians join collectors at auction  Financial Times

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