As ecommerce grows everyday, people are looking for ways to benefit from the great potential the internet has to offer. For new commers to e-commerce or ebay selling, the hardest step is to find legit and reliable wholesale products suppliers. Drop shipping is a quick and easy solution that can get you up and running fast, but you have to do it right or you can easily fail. In many cases, ecommerce startups fail misreably for lack of research and planning. My goal in this article is to explain how drop shipping works. I’m also going to explain the pros and cons of dropshipping, What you need to do before even contacting your first supplier, and how you can avoid the most common mistakes that beginners make.

But what is drop shipping anyways?

When you dropship products, you essentially have an arrangement with your wholesale supplier where by they ship your orders directly to your customers. In most cases, they will include your company name on the shipping labels instead of theirs. Some wholesalers provide this service for free while others charge a nominal fee for it. So, what does dropshipping mean for your business? Let me tell you!

Why Drop Ship Products?

There are many advantages of using dropshippers when selling online. Here are a few of them:

You essentially get customers orders before you order them from your suppliers. This means that your initial investment is minimal, and in some cases none.

No inventory to hold. This by itself is one of the big pros of drop shipping. You don’t have to pay for storage fees, or invest in expensive merchandise, that might stay around for a while before it is sold.

You can diversify your offerings as much as you want. You are only limited by finding the right dropshippers for the merchandise you want to sell.

Sounds good you say, but is there any disadvantages? Well this is life, and as any other thing in life you should expect some cons.

Why Not Drop Ship?

Obviously, there are also some cons that you have to consider. here is an idea about some of them:

A lot of middle-men and scam suppliers. This is a big problem now, a lot of wholesaler wanna-bes are springing on the internet everyday. You have to watch out when choosing your drop shippers.

Inventory volatility. In some cases, you might get an order for a product that is out of stock. You have to either refund your customer or have them wait longer than usual if the wait is not too long.

Smaller profit margins. This is a major one as it directly affects your bottom-line. Like I mentioned before, many internet dropshippers are middle-men that are basically drop shipping to you! For that reason, they don’t have the best profit margins, if any.

Customer service issues and returns. Your customers don’t know your suppliers, they know you. When they have any issue or request such as a refund, they will direct it to you. In that case you have to deal with those issue transparently and professionally. This might mean losses for you at times.

You cannot control the quality, shipping times, customer service response of your suppliers. This might hurt your business at times, when you can’t do anything about it.

What to DO Before Searching For Wholesalers

Well I didn’t want to make things look so gloomy for your future online ventures, but a reality check is needed before taking any serious steps. Now you might ask, should I forget about drop shipping? My answer is NO. If done right, dropshippping could be a very effective strategy at least for jump starting your business. My advise is, if you are just starting out, and you don’t have a lot of money up front, consider to drop ship your products. That doesn’t mean that you jump at the first drop shipper that comes your way. You need to do your homework and find good quality products and good reliable and most importantly legitimate wholesalers that offer drop shipping services.

Before you jump into finding drop shippers, decide which products you want to sell. Go to ebay.com, shopping.com, and pricregrabber.com, and search for those products. Study your competition and pricing. Look how your competitors are pricing their merchandise. Record a price range for all the products you might consider selling. Also, try to read some product reviews, and merchant ratings if avialable.

On ebay look at how the sellers are laying out thier auction pages, and who’s selling, and what kind of demand exists. This is an essential step before even looking for wholesalers. When you do this you will also be able to see how popular differnet products are. On ebay you can tell by the number of bidders. On comparison shopping sites, you can look at their popular products sections, which will give you an idea about what consumers are buying.

In conclusion, study your market and choose your products before you begin selling a single item. If you are on a shoe string budget, then consider drop shipping your products using reliable and legit wholesale suppliers.

If you have some capital to invest I would advice buy bulk wholesale. You will get better prices for actually buying the merchandise. On the other hand that also means arranging a storage space…etc. So, decide what you will sell carefully and test different products first, ad then move forward with an expansion startegy.

Good luck with your ecommerce ventures.

Thomas Griffin is the founder of Urbanload.com - The #1 eBay Dropshipper. Over 2000 eBay resellers can’t be wrong. Make money with our eBay Dropshipping Reseller Program. Don’t fall for scams and overpriced dropshippers. Choose only certified eBay Dropshippers.

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A drop ship business offers an advantage in terms of stocking goods - you don’t have to bother about it at all. But this advantage has a downside: since you are not stocking goods yourself, you may be unaware of some changes in the inventory made by the wholesaler.

Say, you place an order for a certain product, and it appears that it is currently unavailable at the store of your wholesaler. Then, you may have two options - either wait until the product gets available or cancel the order. In both cases, you’ll have your buyer unsatisfied and can be sure they won’t come back to your site.

The problem is that you never know for sure that a particular product will be available at the moment you place your order. Some dropshipping sites do not actually list the total amount of inventory. Thus, drop ship business involves certain risk of backorders. Here are some tips to overcome that.

Keeping An Eye On Quantities

Keeping pace with changes in the wholesaler’s inventory is an essential task for anyone running a drop ship business. To be more exact, the best idea is to follow quantity trends beforehand. Of course it is usually safer to list only those products that are plentiful in stock.

Try Setting Shorter Auctions

If you notice that a product is stocked in a small quantity, you can try offering it for a shorter period of time. For instance, start a 2-day auction rather than a 5-day one. As a result, you may be able to get a pretty nice deal, and will have less time for getting worried as well.

Canceling An Auction If Needed

Apart from checking the inventory before listing a product in an auction, be sure to check its quantity during the auction as well. If you see that the quantity of the product is reducing and gets close to zero, you can consider canceling the auction.

Stock Up with a Few Products

Just to be on the safe side. It is one of the most effective ways of avoiding backorders. The best idea would be to stock up a bit with the best-selling products, and a few items should be enough. By getting several products in store you’ll make sure that you have the products that are likely to be ordered by your customers.

Try to follow these tips to minimize the likelihood of backorders and enjoy your drop ship business with satisfied clients that will be coming back to your website!

Thomas Griffen is the CEO of Urbanload. Do you want to make easy money on eBay? Over 2000 resellers can’t be wrong. Urbanload offers you the best eBay drop ship business opportunity. Visit Urbanload.com to start your own dropship web site with our reseller program.

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1. Thorough market research is the foundation for success Meticulous market research doubles your chances of making a tidy profit from the wholesale goods you buy. Start off with a list of 5-10 different ideas. Then check completed listings searches on eBay to see what the item generally sells for and the sell-through rate for each one. Use Yahoo’s free keyword tool http://inventory.overture.com to find out how many people are searching Yahoo for your product per month. You can double this figure for Google. Add the numbers together. If there are ten thousand or more searches per month for an item, this indicates a healthy market.

2. Calculate the REAL cost of your item One big reason why people fail at the wholesale game is that they don’t do the numbers. In other words, they don’t treat wholesale like a real business. To accurately discover your true profit potential on an item, you need to add the shipping cost and insurance, eBay fees (or equivalent for other advertising), Paypal and/or credit card fees (these can be a real profit killer), packaging costs and labor involved packaging, and any storage costs to the cost of your item.

3. Verify ALL suppliers found on the Internet Getting caught out by scammers is a common stumbling block for people new to wholesale. If you are searching for suppliers off your own bat (rather than using a wholesale directory like SaleHoo), it is CRITICAL to check authenticity before making a purchase.

4. Chinese suppliers give the competitive edge Chinese suppliers are an essential source for anyone wishing to make money selling online. Manufacturing costs are currently extremely low in China, thus it is the secret to gaining a competitive edge. Dealing with China does have risks, but these can be alleviated if you place a small order first, use secure payment methods, get shipping insurance for 110% of the cost of the items, and use suppliers with a good reputation.

5. A common stumbling block for liquidation and closeout Always obtain the reasons for liquidation and closeout sales before you buy. Liquidation and Closeout sales can be a fantastic source for cheap products, but you usually have to buy by the pallet load and these can sometimes include broken or returned goods that aren’t in saleable condition. To be safe, ask specifically whether broken items and returns are included before you buy.

6. Negotiate on shipping and save Shipping economically is critical to importing success. Profits can easily get swamped in shipping costs, so take time to get a good deal on shipping. If possible, negotiate CIF (Cost, Insurance & Freight) or DDP (Delivery, duty paid) shipping terms with your supplier as this takes much of the risk - not to mention organization - off your shoulders. FOB (Freight on Board) is the most common shipping term, but don’t be afraid to negotiate for better.

7. Drop shipping - can you really afford it? Drop shipping sounds great in theory - someone taking care of packaging, wrapping and postage - but it can be difficult to profit from this method. Think about it, drop shipping can add another $2-10 to your costs - sometimes even 10% of the cost of the item. By the time you add in eBay fees and any other costs, you may find it is not worth it.

8. Warehouse storage checklist Asset management is the most important consideration when locating warehousing to store your items. Believe it or not, items can go missing while in storage, causing massive disruption for you. When comparing warehouses, ask questions specifically on how you will authorize the release of stock (by phone or fax?), what will happen if you need to cancel an order, frequency of damage claims, dust management, and whether there is an area you can use to photograph items.

9. Powerseller wealth It’s a fact - eBay powersellers are able to command higher prices for their items than ordinary eBay sellers. To get the best profits on your wholesale items, you need to aim to get and maintain powerseller status.

10. Growth with a website and eBay store The way to increase profits from wholesale is to build your own website and/or open an eBay store. This allows you to cross sell items plus it also makes it easier for people to find what they are looking for. For example, if you sell shoes, then customers can easily navigate to browse all black shoes in size 9 and so on. Always include a sentence at the bottom of your descriptions encouraging visitors to check out your other listings - most people will.

Do you want to Make Money on eBay?. Thomas Griffin is the founder of Urbanload - The #1 eBay Dropshipper. Over 2000 resellers can’t be wrong. Visit UrbanLoad to join our free reseller program. Choose from a wide range of over 1000 products to dropship.

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Dropshipping offers a the little guy the opportunity to get ahead on the internet by offering top products, even name brand products without having to invest thousands of dollars of inventory, shipping products, or manufacturing.

Dropshipping is the opportunity for a home based business, using the internet and even ebay.com, this article will give you 7 basic steps to finding dropship and wholesale sources and starting your own home dropship business from the internet.

1. Step 1, finding your niche. You’ve probably heard of this phrase if you’ve studied internet marketing at all. A niche is a specialty or subject that you will focus on when deciding what products to offer your customers.

Choose something you know alot about as you may have a better idea of the pricing and value of products that you are familiar with. You may also know what your customers are willing to pay for products and what the customers look for in different products.

2. Find Dropship suppliers. This may take some time and research on your own. If you’re very lucky you may find a local wholesale supplier willing to dropship products for you to your customers. Another choice is to consult a dropship wholesale directory like the one at: http://www.freewebsuccess.info/dropship-wholesale to find the type of products you want to offer within your niche.

3. List items on Ebay.com. This is an important shep even if you want to sell items via a website only. Because ebay.com is a great low cost place to find out what the demand for a product is and how high a price customers are willing to pay for an item.

Consider this your cheapest market research tool. Learning how high a price customers are willing to pay for your product will help you set your prices.

You could use ebay.com to sell products monthly as well and email customers about your website should you choose to build one.

4. Build your e-commerce website. If you need help with this you may want to learn html on your own rather than hire a webmaster for thousands of dollars. There are plenty of free information websites that will teach you about html. Just google html.

5. Build a list of contacts/customers. The real value of a customer can be drasticially increasedif they become a repeat customer. Think about it, the most expensive part of your business will be getting new customers, so you might as well get as much value out of each one as possible.

You do this by getting the customer to subscribe to your newsletter, or to give you their email address so you can tell them about new produts or specials. Offering them something of value for free many times will convince them to subscribe.

6. Upsell your contacts. This is easy, use the list of customers you have gathered to offer specials, deals, or inform them of new products. Or simply send them tips and information about the niche you have chosen.

7. Expand your product base. If you add new products to your current items customers are more likely to return to the website to see a new item. Especially if it’s a hot new item just coming out on the market, so keep your eyes open for new product development within your niche.

Do you want to make easy money on eBay? Over 2000 resellers can’t be wrong. Choose the best Dropshippers for eBay. Visit Urbanload.com to start your own Dropship eBay Business. Dropshipping made easy. Imagine that.

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