What Is Drop Shipping?
These days, almost everyone seeking to find information does so by performing a quick Google search. But if you are new to the drop shipping business model for example you will likely have a lot of questions on you mind right now. Questions like how do I learn how to do drop shipping business or better still what is drop shipping all about?
I would be careful as there is a lot of misinformation flowing around the internet on this topic. If you are reading this post right now, then you are lucky to have come to a page that will provide you with a detailed explanation of the process.
Drop shipping otherwise known as “closed eye shipping” or “Blind shipping” if you like; is an approach or technique used when selling items online that enables you to sell tangible physical products without actually touching or seeing them.
Firstly my one piece of advice for any newbie is to start from scratch and learn the basics of drop shipping business model before jumping into it.
For intermediates and professionals I would say continue to brush up on your skills to keep updated with current trends within the drop shipping business model because things changes as today’s economy reflects.
How Does Drop Shipping Works
There are a few ways out there one can employ to follow but so far and from my findings, the best strategy can be seen below:-
- Look for a reputable drop shipping supplier online or near you.
- Apply for approval and get approved to sell for a”drop ship supplier”.
- Make sure this supplier has at least one or two warehouses located near you. In my case, the UK for example where they keep inventories.
- Create an e-Commerce website
- Once approved for an account by a drop ship supplier, they will send you their products list via email and you can list these products on your website.
- When people buy these products from your website, you can then buy them from your “drop ship supplier” and have them ship this item/s direct from their warehouse to your customer.
- The different between what your customer pays you (the retail price) and what you pay your drop ship supplier (the wholesale price) is you profit.
Drop Ship Suppliers, Who Are They?
Basically there are two types of drop ship suppliers you will come across when starting out.
- Private brands
- Paid membership types of suppliers with no price control
As a new entrant into the drop shipping business model, you are far better off working with the private brand suppliers than the paid membership types that has no price control. The latter you will want to avoid where possible for many reasons which you will soon find out as you read on.
Private Brand Drop Ship Suppliers
Private brand suppliers are those you will want to work with because:
- They do not sell directly to the public
- They sell to high street retailers and online merchants like yours potentially.
- They care about their product and they value their brand a lot.
- They show case excellent customer services, high quality products image and price protection
These kind of suppliers do not want their value to be debased so therefore will not work with any online retailer who will do so by offering cheap pricing.
If you are selling a $1,500 ladies hand bag for the price of $700 simply because you are OK with a small profit margin.
In doing this you are reducing the value of that particular brand and these private suppliers do not like this. Therefore to curb such from happening and enforce price protection on their branded items, they have set up what is called MAP policy (Minimum Advertised Price).
This means that there is a minimum price that you the retailer can advertise items to sale for. A good example is if the MAP for an item or product is set for lets say $800, then you are not allowed to list such items for sale under $800. No one is allowed to do so. You can raise the price and it’s OK if you have to cover your margin and make profit but you cannot sell below the MAP price of $800 or you will risk having your account suspended or banned in extreme cases.
These policies were set by brand owners to protect their image of not supplying cheap products and also to protect you the retailer’s profit meaning no one can undercut you. Working with drop ship suppliers that do not enforce these pricing policies may be problematic as you will find out below.
Problems Associated With Suppliers Who Do Not Enforce MAP Policies
These suppliers also knew that the paid membership type has no price control mechanism and are easier to be found by newbies. If for example you do a Google search on any niche plus drop shippers, you will notice that they appear high on top of Google search results.
The following reasons are why I will not sell for these suppliers and so should you:-
- First they do not enforce MAP policy hence there is no price protection
- They make drop shipping known as their business model hence they do not focus on their brand value, instead seem to push items into their retailers hands. In this case you.
- They are commonly know to push as much product as possible out the door to you because they do not enforce pricing protection policies. (MAP)
- They charge you for been a member of their retailers. (Never pay to be approved by any supplier. If you don’t know how to avoid this, then please read on).
- They basically just send you one price list. Which can be confusing and quit hard to determine where your PROFIT margin should be.
- The price list they send you will only be made up of wholesale cost with no MAP (Minimum Advertised Price).
- Giving you the impression that you can sell the goods at any price you like and make as much profit as you want right? Well think again because it is not. It is a bad business model.
Why these other supplies are thriving are because a lot of newbies are OK to be making lets say 5% profit as margin or even less in most cases. Because these suppliers are eager to push more product to them as their main goal, they are fast to approve any newbie that applies and pays.
This is a bad business model and one that will never make you grow financially with drop shipping. And I definitely would not want to be caught up selling for these companies if I were you.
Want To Properly Learn How To Drop Ship Profitably?
I happened to come across Anton, the creator of the Drop Ship Lifestyle course himself and he has designed a very productive mini 10 days course that will help you get a grip on all you need to know about Drop Shipping.
Or you can jump right in and get started with setting up your Drop Shipping business Right Here
These includes the fundamentals too and I highly recommend you get started and learn how to drop ship profitably.
There is no limit to what you can learn. And there is no better way than learning from someone who really knows how to drop ship profitably with lots of proof and willingness to share his strategy with you.
If you have any questions or comments please do not hesitate to drop me a line or two in the box provided below and I will get back to you immediately. I hope after this training you will have learned how to drop ship profitably.