Drop Shipping

I've had a brief look at drop shipping here and there as a possible way of selling products from a few of my sites and have yet to find a consistant description of what drop shipping actually is.

I found this paragraph written by someone on the net and I'd like to know if this is something that everyone would agree with

 

Yea, basically in a nutshell...

1. Customer orders product from you
2. You have the product shipped directly to them from your supplier.

Pros: No inventory to purchase, manage, keep stocked
Cons: Little control over ensuring timely shipping and harder customer service.

 

The main bit I was concerned about is

- what do you do with the money that customers pay with on the site?
- Do you set it up to get paid to the stockist or does it get paid to the website owner?
- Does the website owner actually buy stock from the stockist which stays at the warehouse?
- How do you manage how much stock is available?

 

Weir did you read my blog?

 

I hadn't noticed that actually lol.

Thanks for the info Corena. Just reading it now!

 

weirfire,

I am on both ends of the drop shipping system so here is a bit of what I have learned over the last 10 years.

1. a Drop shipper is usually the manufacturer or distributor of a product.
2. they will ship directly to your customer instead of you buying the stock upfront, storing, packaging, shipping, etc...
3. you send them an order - they ship it to your customer and bill you for
a. the product
b. shipping
c. drop ship fee (I have paid fees from $1 to $5 per address/order)
4. you are responsible to collect funds from customer such as e-commerce, etc..
5 you keep the profit - if done correctly! (this is were so many on the net are ruining the value of products by not keeping the markup high enough - ask me about this if you want a rant)

 

This is what pisses me off most about products that are dropshipped. You get these people who sell stuff at 10% markup and are happy with the extra 50-100 dollars they make each month. And it eventually kills, what was, a very good product cuz people start to expect prices to be so low. This is my problem with ebay as well. It creates an unfair expectation as to product pricing.

 

Can the drop shippers not specify that the sellers sell the product at a certain rate?

 

Its impossible to police, besides there are ways around it. Many manufacturers put a MAP pricing on it (minimum advertised price) but merchants find ways around it to offer prices that are lower.

 

Many manufacturers do that but it's easy to get around (obviously).

I had a major (household name) manufacturer threaten to drop me if I continued to sell below their suggested list price. So I told them to cut me off or sue me.

They did neither and one year later I still offer the product for less $ than anyone else on the Web.

 

It kind of goes both ways too. I have a product that I buy for $17. I sell it for $49 on my site. Manufacturer wants me to sell it for $100 because they do at that price in the malls. I upped it to 79.95 for a while and got no sales on it, and said this is BS, so I put it back down to $49 and it sells well again. They haven't asked me to raise it again LOL

 

Price fixing is illegal in the US, but the manufacture can deny you the product. I have told a few suppliers that if they keep selling to www.joe-discount-the-crud-out-of-the-product.com that I would drop them as a supplier. If you sell enough of their stuff and pay on time, they will either drop the idiot or charge him more for the products.

Many suppliers now work on tiers for internet stores. They will give you better prices if you have a brick-and-mortar store. Some suppliers are seeing the effects, especially when the value of the product drops to where it goes to china to be sold at retail profitably.

 

I suppose if people are selling it for cheaper then as the drop shipper you just have to raise the price of what the product costs the retailer depending on whether you are the only distributor or not.

 

Lots of money to be made in dropshipping....
-Pricing = I never sell below what my distributor sells the product for, but in my case I always find products that are either in short supply or only wanted by a specific group of people. The situations you all are describing usually runs rampants especially in the electronics market since there are so many people selling the same thing and will do anything (extreme low prices) to make a dollar.
-I've seen beginners trying to dropship wholesale, trying to dropship products using a bad drop ship directory and in turn don't ever sell anything so they'll lower prices to the levels you are describing and are happy with maybe an extra 50 bucks a month. The key is to find things that aren't offered many places, that's what I do and have done well.

 

Hi,
My name is shell and I do have a drop shipping business called GIC dropship . Com . We absolutely do not have any added dropship fees, or membership fees in fact no added or hidden fees period and we do offer Free US Shipping and Insurance on every order as well. We are currently offering over 55,000 products at 20%-89% under retail. I think it is absolutely vital for someone who wishes to sell online to find their own personal NICHE product. I really think that we offer enough variety to make finding your niche possible. Some products do extremely well on ebay and some sell better on other venues.

We offer real time order tracking as well as a gift registry to help you keep track of the items that you wish to sell. Since I personally take care of shipping and customer service I know that you would be very pleased with the service that you would receive from Gic Dropship. We have a great return policy as well.

It seems to be such a jungle out there in the realm of dropshipping , at least that was my experience before I got into this business.

I hope that you will at least try us out. If I can answer any more questions that you have just contact me.

 

Thanks for that great insight into your own business Shell77. I will definitely have a look at the services you are offering

 

Thanks Weirfire I appreciate it alot. You know how it is getting established selling online.

 

I found my niche. There is a lot of competition on eBay. Do oyu think using eBay as a loss lead (or break even) to direct people to your site is a good idea?

 

It's actually against eBays terms to do this and they may remove your auctions if they find out but you can always get round it by saying things like "For more information on this product go to this website here"

 

Interesting thread.