Drop shipping has been a sales technique for a very long time. It has probably been as long as the word falls. Bad humor aside the drip freight has been so long so many people have found it wrong as a technology and have sent their critics to see everyone. These criticisms do not completely destroy the drop shipping. It is still a valid sales method when used correctly. However these critics warn that some ways to drop shipping do not work as well as other ways to make this kind of sale.
If you plan to jump into the freight pool keep your eyes open and be prepared to move the gear when the conditions change.
Here are a few points to be aware of dropping freight
Margins can be very thin.
Drop shipping can be a cutthroat business.
Lets say you buy a product for $ 10 from the wholesaler or distributor. For this example lets be very trendy and call it an organic pasta product. There are companies selling products such as organic pasta makers for $ 10 to sellers who hope that sellers like you have a sales website or place items for sale on eBay tm and similar sites.
You make the sale then communicate with the company at the next level drop shipper or wholesaler or distributor as you have a customer. You enter the customers address and if everything goes as planned the goods are loaded and sent from a warehouse or fulfillment center to the customer.
For this example lets say you sold the organic pasta manufacturer for $ 25. Because you bought the item for $ 10 or if you have an agreement that you will buy for $ 10 at the moment you have a willing buyer who actually sends money makes sure that you only made a good win of $ 15 .
Sounds like but wait a moment. You have costs. How much does it cost to run your website or to bid on eBay? How much did it cost to handle the transaction part of the money the part often handled by Paypal tm or the credit card company? How much time and money did you spend on setting yourself buy the modern website and the template? How much does it cost to care for potential customers while asking millions of questions before choosing to buy? How much does it cost to replace a lost or defective product? Etc etc
If you are really honest with yourself you must admit that the costs are eating a lot of your profits. If you sell only a few things we only say ten organic pasta makers you are skunked. Most of the time shipping is not worth your bet if you do not sell in volume. Large volume.
So youd rather have a product that is unique and that many want. Otherwise the costs will take out the air from you.
This leads to the next point how many products are there that are unique enough to support high sales for your offer? That is will you sell something that no one else sells? Or so few others are selling you to make the sale?
Lets use the example of digital cameras and iPods. Digital cameras and iPods are hot sellers. Buy them at a low price and sell them at a high price and live well. The problem is that other gazillion websites sell these goods. Before anyone buys from you it is very good that the buyer makes a web search to find the lowest price. If another site sells your cameras to $ 1.27 less than youre likely to lose your sales. Unfortunately thats the way it is.
You can do a couple of sales here and there if you have an arrangement with a drop shipper to sell a popular item at an average price. But you will not make volume sales if you do not have a unique low price for things that another gazillion sells. Sales are a cutthroat business. Do not expect to survive if you can not meet or beat other low cost offers.
Most dumped intermediaries and intermediaries only offer you items at average prices. If thats the best thing you can do do not expect to survive in the long run. As long as there is someone out there selling at a lower price than you you will be sanded down in the dust.
The lesson that can be deduced from this example is that you will survive as drop shipping sellers if you have a good selling price and if you have a unique product like a gazillion other people do not sell. You must be selective. You must be in front of the audience. You need to have your eyes open. There are ways to beat the system. Be on the toes and be before the parade.