dropshiphandbook by Alojamiento Web Barato

CONTENTS Chapter 1

Dropshipping overview & definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Chapter 2 Two case studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • Situation A: It makes starting a business almost risk-free . . . . . . . . . . . . . • Situation B: It allows you to target small niche markets without the risk of carrying extra inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chapter 3 How it all works: Lifecycle of a dropship order . . . . . . . . . . . . . . . . . . . .

1 1

Chapter 4

So what services can I expect a dropshipper to provide? . . . . . . . . . . . . . . .

Chapter 5

Pluses & pitfalls of dropshipping . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 • Pluses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 • Pitfalls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Chapter 6

Anything else I should know? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Chapter 7

What to look for in a dropshipper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter 8

SaleHoo recommended dropshippers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chapter 9

Strategies to excel your dropshipping & avoid the pitfalls altogether! . . . . . .

Chapter10 The final word: Jonathan Berkley’s 3 secrets to dropshipping success . . . .

2 2

Dropshipping overview & definition

Drop shipping is a supply method where the retailer does not keep merchandise in stock, but simply advertises the inventory of a wholesaler and then transfers customer orders and shipment details to that wholesaler to fulfil. The wholesaler then ships the goods directly to the customer.

Who Does Drop Shipping Suit?

Drop shipping is particularly suited to people just starting a business without much capital to invest. It’s also a great option for retailers looking to expand the inventory of their existing businesses without the risk of acquiring more inventory.

What Products Are Best To Drop Ship?

Almost anything can be drop shipped, but it is best to go for items with higher margins.

TWO CASE STUDIES Situation A: It makes starting a business almost risk-free Clare Fitzgerald has decided to start an eBay business selling women’s lingerie. At first she envisaged buying in bulk and managing inventory herself. But she was shocked to learn this would involve forking out at least $1500 for initial inventory and with a family to support, she just didn’t have that kind of money to risk. And when she went to visit a friend who was also an eBay seller and saw his garage filled with stock neatly labelled, numbered and organized, along with the inventory software he used to keep track of his sales, she realized there was a lot more to stocking inventory than she had initially realized. Yet another surprise was when her friend said: “It takes me 2-3 hours a day to package and process all the orders to ship out the following day.” Clare simply couldn’t imagine where she’d find that time each day with three children to cook tea for, do homework with and at prepare for another day of school and other activities. Luckily her friend came to the rescue with the suggestion, “Why don’t you look into drop shipping?”. Although drop shipping meant that the wholesale price wasn’t as cheap and a $2-$5 handling charge for each item, Clare learned this meant she would only pay for items she sold and that the drop shipper would store, package and ship all the items out to her customers for her. Her only tasks would be listing and managing the eBay auctions, which seemed much easier to manage.

Situation B: It allows you to target small niche markets without the risk of carrying extra inventory John Wilton has operated a successful DVD & Game web store for 2 years but he feels there is room to differentiate further from other similar stores if only he could target some of the smaller niches that most stores overlook. The problem is, he can’t afford to buy all the stock and carry it in the hope that he might get the occasional purchase. So he decides to drop ship. Drop shipping allows him to stock lesser-known cult titles most of the big stores don’t stock, but without the risk of physically carrying the merchandise. John now sells 50-60 extra titles a week on top of his existing sales, giving him an increase in profit of $12,000 a year.

HOW IT ALL WORKS: LIFECYCLE OF A YOUR DROP SHIP ORDER

That’s how the majority of SaleHoo’s dropshippers work, but there are some variations:

• Some dropshippers may ask you to put money into your account when you set it up.

• Not all dropshippers provide pictures and descriptions.

• Some dropshippers may ask for a joining or account set-up fee.

• Some dropshippers won’t have a website ordering system. Rather, they may require you to email them your orders.

SO WHAT SERVICES CAN I EXPECT A DROP SHIPPER TO PROVIDE? Most dropshippers will:

• Provide you with pictures of the item.

• Provide you with a basic item description.

• Ship ‘blind’ – meaning they will ship with your company info on the box rather than their own.

• Provide you with a shipping tracking number for all orders.

• Will ship in a timely and professional manner.

Some may also:

• Handle returns for you.

• Insert your catalogue, business card or other marketing materials into each shipment. Provide real-time inventory data (although sadly, most drop shippers are not set up to provide this).

Dr Ross Malaga (The Drop Ship Professor) says:

“I had a drop shipper for one of my online retail sites that had fantastic products. However, they took a long time to ship and when they did ship we never received tracking numbers or even an invoice. They were billing my credit card, but I couldn’t tell what had been ship or even what I had been charged for shipping. When I finally got through to the president of the company and received invoices I found that we were being charge an exorbitant amount for shipping. Needless to say we stopped selling their products immediately.”

PLUSES & PITFALLS OF DROP SHIPPING You’ve probably already got a fairly good idea of the benefits that drop shipping can provide. But like anything, drop shipping also has its downsides too. Here’s a brief look at both:

Pluses

• You don’t need capital to get started. Drop shipping is ‘pay as you go’.

• No need to store product on your premises.

• All inventory management, packing and shipping is taken care of.

• You are able to offer a wider range of products to your customers

Drop Shipper Jonathan Berkley of Northern Value LLC says:

“Salehoo members need to understand that when they dropship, they are paying a slightly higher price to the dropshipper to assume many risks. The risk of stocking and carrying inventory is huge. A dropshipper will also typically take on the risk of shipping the item with the carrier and will usually be the one to take a loss if something happens to the shipment. Therefore, someone who is dropshipping will have smaller profit margins, but will also have a much better chance of succeeding in starting a business, as one bad purchasing decision will not eliminate all of their working capital (cash).”

Pitfalls

• Drop shipping is slightly more expensive because you are not benefiting from bulk discounts. You are also charged a small fee per shipment to cover the drop shippers handling costs. Combined, these additional costs can make it more difficult to compete in some categories on eBay.

• You need to watch out for drop shippers who charge excessive fees (outside of SaleHoo, obviously!).

• Backorders and fulfilment problems are reasonably common. Backorders occur when the supplier suddenly runs out of stock, leaving you with sales that can’t be fulfilled.

• Some drop shippers provide poor service that can result in negative feedback from your customer.

ANYTHING ELSE I SHOULD KNOW?

• Not all auction sites allow drop shipping. TradeMe, for example, stipulates that every item you sell must be in your possession at the time. And they have been known to pull auctions when the seller is unable to prove they have the items on hand.

• On eBay, you must list the item location. So if you are using a drop shipper in Hong Kong, you have to state that the item is in Hong Kong, rather than simply putting your location. On the downside, some buyers may be put off by this, but on the plus side, being honest with your buyers means that if a backorder or shipping delay does occur, they’ll be less likely to give you negative feedback.

WHAT TO LOOK FOR IN A DROP SHIPPER

• A US drop shipper should request your resale certificate. If they don’t ask for a resale certificate, this could mean prices are above wholesale

• Low drop shipping fees – most drop shippers charge a fee between $2 and $5, but if you can find a drop shipper who doesn’t charge any fees at all, so much the better.

• No or low membership fees.

• A returns procedure.

• Blind drop shipping.

• No MOQs.

SALEHOO RECOMMENDED DROP SHIPPERS MK Enterprise – These guys are one of the best drop shippers you’ll find for many top branded electronics, mobile phones and laptops. Lingerie Mart – Highly rated stockist of beautiful, sexy lingerie that is extremely popular on eBay. Drop Ship Direct – Provide a wide variety of interesting products you won’t find elsewhere such as collectible comics, trading cards and figurines, a huge range of automotive and motorbike parts, plus some exciting furniture and homewares. Drop Ship Services – UK drop shipper stocking sort-after brands such as Sony, Bosch, Philips and BaByliss. Particularly good range of home appliances and auto. FragranceNet – Up to 70% RRP of over 10,000 popular brand perfumes.

US wholesaler and registered SaleHoo seller offering apparel, hunting & fishing equipment, kitchen ware, leather goods, motorcycle and much more.

Northern Value offers fantastic pricing and has frequent sales promotions. There are no drop shipping fees or membership fees, enabling you to increase your margins even further. Coming into summer, Northern Value suggest SaleHoo members try selling any of the motorcycle items, fishing supplies, camping equipment and hunting knives.

Owner Jonathan Berkley has years of experience running an online wholesale business and he’s recently decided to impart some of his extensive business knowledge via a blog.

Check it out here: http://northernvalue.wordpress.com/

Activa8UK – Top UK drop shipper for electronics. Compgallery – Excellent drop shipper for some of the top sellers on eBay and Amazon for DVDs, Games and Music CDs. -6Copyright © 2008 SaleHoo Ltd. All rights reserved. No part of this ebook may be used or reproduced without permission from SaleHoo

STRATEGIES TO EXCEL YOUR DROP SHIPPING & AVOID PITFALLS ALTOGETHER!

• Before you begin using a drop shipper, test their shipping time and presentation by placing an order addressed to yourself. Continue to carry out occasional test orders to make sure standards are being maintained.

• Rewrite the provided titles & descriptions so you stand out from everyone else who’ll be using them!

• Don’t think of drop shipping as being a no-hassel ‘get rich quick’ scheme. Instead, think of it as a supplier system that provides great benefits, but also presents challenges that need to be tackled.

• Contact the drop shipper each week by phone or email to check up on supply levels.

The final word: Jonathan Berkley’s 3 secrets to dropshipping success

1) Lots and lots of hard work and research.

2) Determine how much money you have to operate your business, how much will it cost to sell your products on eBay or another site. Is anyone else selling the product that you are going to try to sell and if so, what are they selling it for?

3) Price out your total cost for selling a product and overhead costs and make sure you are going to be profitable before starting to sell.

• Keep 2-3 items on hand in case of back order issues. This will allow you to fulfil current orders and keep customers happy (and your feedback high!).