Drop shipping is where you sell manufacturers products on your website, eBay, Amazon, or other e-commerce methods and ship that product direct from the manufacturer. You collect the money and then pay the drop shipper for the product and their fees and the rest is your profit. It is a great e-commerce solution for the following reasons:
- You don’t need a lot of money to start up with. You dont have to worry about huge buy ins to get the best pricing, or purchasing needless and expensive inventory. You also are able to offer your customers a variety of products without having to stock them. You also have access to higher dollar items you wouldn’t normally be able to stock due to the upfront costs. And not having inventory is a lot easier around tax time.
- One of the biggest time requirements in e-commerce is shipping. You can spend hours on shipping, customer service, package tracking, and other fulfillment issues. With drop shipping a lot of those issues are handled by the drop shipper.
- It is a great method for the Online Business Reef because you can do it anywhere, wearing anything, and doing whatever. All you need is your computer, a WiFi connection, and the rest could be done in your pajamas or in the bathtub.
- A lot of people think this could be a scam or a get rich quick scheme. But this model has been around a long time and is used successfully by many large retailers.
- First you need to make sure you have a legal business structure setup and meet the other requirements of the drop shipping company. Most of these companies will require that you are a legitimate business with a EIN number and applicable Tax Resale Licenses and maybe even a business license. These are all obtainable even if you work out of your home. See our article on the legal ways to setup your online business.
- Second you will have to find a few good drop ship companies who can help you on your way. Luckily you have us, and you know we wont leave you guessing.
So here are the top 7 drop ship companies we like.
- DOBA – they have over 2 million products all in one catalog. Has a good inventory system with proactive alerts and allows you to push products directly to sites like eBay and Facebook. They have a 7 day free trial and a money back guarantee. They seem to be the top rated site and their monthly fee starts at $59.95 and you can save more if you pay annually.
- INVENTORY SOURCE – Inventory Source provides industry-leading Dropship Management solutions that allow you to sell more and work less. We monitor the inventory of multiple major distributors across a broad range of product categories, and when the items change in supplier inventory, those same changes take place automatically on your website. They have a free section you can access and see the membership area and plan start at $25.00 a month.
- WHOLESALE2B – Wholesale2b is a leading provider of drop ship product content data and services. Our product inventory includes over 25,000+ categories/sub-categories with a growing selection of latest and greatest wholesale products offered by only the best and reputable wholesale suppliers. They cater to eBay and Amazon. There prices start at $24.99 per month and they have a special eBay program for $67.99 per year. You can signup for a free account and see their products.
- DROPSHIPDESIGN – Dropshipdesign offers the best and most affordable drop ship service. With our team’s combined experience in dropshipping, product sourcing, and top notch customer support, you can be confident that our dropship services will meet your demand. Most of their plans offer no monthly charges just a one time fee. They have several options including an eBay only option or a special prices for all their plans together.
- DROPSHIPPERS – Our drop ship product services build sales, increase profits, and makes eCommerce easier. Our catalog has 3.5 million wholesale products. If you find any another dropship company with a larger selection of wholesale products we will give you $100 credit toward your DS membership. They have a free trial and plans with no monthly fees starting at $99.99 and seemingly good support.
- DROP SHIP ACCESS – Drop Ship Access makes it easy for you to find wholesale products to sell. We ship directly to your customer, so you don’t have to worry about storing or shipping products. Whether you want to sell just on eBay or desire to have your own website, we can help you do both easily. Their site is not the best website and their prices are not up front like others.
- SUNRISE WHOLESALE – Sunrise Wholesale Merchandise Drop Shipping is a Better Business Bureau listed company with expertise since 1999 in wholesale drop shipping. Sunrise is a wholesaler that provides customers with products for their own drop shipping business. Sunrise has a large list of product categories including wholesale electronics, apparel, gifts, home decor, bulk buys, tools, toys, garden, sports DVD and more! They have a 7 day free trial and plans start at $29.95 a month.
These are three honorable mention drop shipping companies.
- PRODUCT SOURCING – It’s super-simple and even better—it’s free. Gain instant access to over 30,000 name brand products. Sell online for a profit or buy for yourself – up to 75% profit margin. Once you sell a product, our supplier will ship it directly to your customer. Place and track all of your orders right here on ProductSourcing.com. It’s just that easy.
- MEGAGOODS – Megagoods, Inc is a distributor of consumer electronic and video game items with a specific concentration on drop ship/ fulfillment services. We are dedicated to providing our partners with the tools and services to further expand their business through the utilization of our vast line card comprised of today’s leading brands. Not a lot of products like other sites but they dont require a business license.
- NATIONAL DROPSHIPPERS – When you make National Dropshippers® your wholesale product sourcing partner, you will get immediate access to thousands of different products from several manufacturers, distributors, and liquidators that you can drop ship to your customers without maintaining an expensive inventory. Our suppliers will ship products directly to your customers! Prices start at $19.99 per month or you can get a full turn key e-commerce store for $299 which will help you get a jump start on selling.
Like with anything there are some risks. Mostly if you are prepared for them you can minimize their impact. Some of the most common risks are as follows:
- There will be quite a few people doing this type of drop shipping. It is popular and even big retailers will do it. What you have to do is find a niche you can specialize in and offer value to your drop shipped products. Also you may have to work on slim margins. Margins is the percentage between what you sell an item for and what you pay for it. 10% margins or less are not uncommon and you have to make sure you cover your costs when selling on sites like eBay which can charge up to 16% in final fees to sell a product. We have discussed how to add value to your products and work on slim margins in another post here.
- When selling products online you must always walk a tightrope with what you are offering on as many as 4 different sites one one side and what your drop ship companies actually have in stock on the other. Sometimes you may get caught with being unable to ship a product due to it being out of stock. A lot of good drop shippers have good inventory alert systems but it still can be an issue. One way to avoid this it to use several different companies with similar products.
- In some cases you will not be able to write awesome and differentiating sales copy because you dont know what the product really is or have not used it yourself. Some sites like Amazon and eBay have a sell similar button so you can get the most updated sales copy and be like everyone else, or you can fake it, but in most cases you just have to do your best in writing good content. One good way to do this is to pick something you have an interest in, pick the manufacturers brain for copy and photos, and even try the product out yourself. You can always sell it as a test product for cost, getting your money back.
- Make sure you are prepared for the challenges of customer service. You need to remember that the customer is always right even when they are wrong and most payment options side with the consumer. Basically they have more recourse as a buyer then you do as a seller when something goes wrong. So be prepared that you will have to ship some product out to your customers at no charge, things will get lost in the mail, there will be fraud, and not all drop shippers will work with you to solve customer service issues. Remember IT IS YOUR reputation on the line so you must act accordingly with honesty, integrity, and professionalism. This will maintain your status as a seller who cares.
A Final Word on Drop Shipping Companies is this… YOU DON’T HAVE TO SETTLE for the normal drop shipping companies. If you have a particular interest in an industry like automotive parts you can contact the manufacturers themselves and ask if they have a drop shipping program. You will have less competition and a closer working relationship. For instance, taking our automotive parts industry, a company like RUKSE will drop ship their products for you and allow you to secure better profit margins and have access to less competitive products (which means you are not competing with every other reseller out there).
PLEASE NOTE that drop shipping is not the end all as an e-commerce solution. You should have a balanced approach to selling products online. A good mix of affiliate programs, drop shipping, stocked inventory, and services may serve you better than just drop shipping alone. Being specific in your niche is fine but diverse in your revenue streams will help you weather any economic storm.