What is drop shipping?

I have already written a post on dropshipping but here are some pros and cons of dropshipping discussed in further detail. Dropshipping is a method of trade whereby the product distributor sends the purchased product directly to the customer. The seller acts as a middle man and does not come into contact with the product at all. The customer buys the product from the seller at a fixed price. The seller than buys the product at a lower cost from the distributor and makes a profit from the difference between the two prices.

Drop shipping Pros

  1. No inventory needed
    You don’t have to fill up your bedroom, garage, attic with lots of boxes of goods that may or may not be eventually sold.
  2. No cost of having goods delivered to you
    You don’t need to arrange and pay a carrier to transport the goods to your house / warehouse (if you run a large operation).
  3. Spend more time on other parts of your business
    You don’t need to spend time on the logistical parts of your business like packing and shipping of goods. This gives you much more time to focus on getting customers for your products (marketing efforts).
  4. No packaging required
    You do not need to spend money on parcels, boxes or envelopes for packing purposes

Drop shipping Cons

  1. Can be more expensive than ordering an inventory
    With dropshipping, the unit cost of each product is usually higher than if you bought a large quantity in bulk. This is because the supplier needs to cover their end of the operation where packing and shipping costs are concerned. Hence, your profit margin is reduced.
  2. Shipping Problems
    Although you are not the one physically packing and shipping the items, you are still responsible for loss of packages. You can’t just tell your customer, ‘Hey, I already placed the order and it’s not my fault it didn’t arrive. The supplier messed up’. You will need to appease the customer and do damage control even if you are just a middle man, or your reputation will be greatly hurt and this can affect sales.
  3. A number of distributors are not consistently good dropshippers
    Some distributors refuse to dropship because of the paperwork involved. When many different sellers contact them for dropshipping, it can be heavy on manpower costs. They just prefer to sell in bulk as inventory to big-time resellers.
  4. What if the distributor runs out of products?
    This can happen and in fact it happens very often. Most dropshippers just want your business and may not tell if you they are running low on supplies. If they do a backorder because they have run out of items, your customers need to wait longer. Some customers are not that understanding and may make a complaint against you for non-arrival of items / not sticking to stated delivery times.

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Adding on to my post on what stuff you can sell online, here are the top 4 kinds of goods you shouldn’t attempt to sell, as these are the kinds of items that are proven to be non-profitable especially when you are starting out with little capital. There are exceptions so do not take these 4 pointers as set in stone. For example, some people think selling products that cost less than $10 yields low margins and is a waste of time, but I have shown you that small items can be profitable too.

1. Products Everyone Else Are Selling

A lot of people assume that the best way to start selling on eBay is to sell items that everyone else is selling. These super hot items may be iPods, cellphones and so on. They think:

“Hey this is a hot product, everyone will be scrambling to buy right? Maybe I should jump onto the bandwagon!”

Big mistake. If you try to get a slice of the pie you will find yourself burnt. Sellers that are already selling these products are more established and are familiar to buyers. They also likely to have more capital and can afford to buy insane quantities to keep as inventory, hence their per unit cost will be significantly lower than yours. It will be extremely hard for you to make any profit in markets that are already very saturated by the big players. Unless you have been selling for a long time and know where to get products for cut-throat wholesale prices, you are best starting small first.

2. Things You Love, But No One Else Does

This sounds pretty much super-obvious, but you may fall into this strap if you are too concentrated on what you like. Focusing on a niche that is too specialised can be dangerous. Do not think ‘Oh, this isn’t doing so well now but eventual it will, when more people find out about my products’. A highly tight niche has a small pool of people interested in it, and an even yet smaller pool of these people who are interested in buying. Put yourselves in the shoes of the mass consumer.

3. Items That Are Fragile & Difficult To Ship

This genre of items are minefields. Items made of clay, china, ceramic or plants etc are prone to getting damaged. When you end up refunding 30% of orders  because angry customers complain of receiving damaged goods, you are going to suffer a loss. Unless you are very sure you can pack these items properly, there is a high chance of them getting damaged. Especially when shipping overseas, your product is going to change hands several times. I have seen postal services like China EMS simply throwing parcels around when loading/unloading. Check this video out and you will be shocked.

4. Items That Are Fragile & Difficult To Ship

Pondering starting with large products like furniture, pianos, traffic lights, space stations? Don’t! Unless you already have experience selling and shipping these items, it’s wiser to start with something smaller. Shipping such large items is a major undertaking. Also, these items will also sell less often (although profit margin may be higher), as they won’t attract the same number of buyers who purchase on impulse as with smaller, cheaper items.

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Add FREE Emoji Icons To Your iPhone!

Haha! I’m so excited about this even though I might be a little slow. But those who paid $1.99 or $0.99 to add Emoji icon functionality to your iPhone, you’ve been ripped off!
For this to work you need to jailbreak your iPhone, you can simply go into Cydia and install ‘Emoji’. Reboot, and then go [...]

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The Affiliate Code Review – Can Anyone Make Money Doing 'Affiliate Marketing'? Probably The Most Honest Review About This Product On the Entire Internet (Part 2/2)

Edit: The editors at Ezine Articles have made this review of The Affiliate Code a featured article!
Welcome to part 2 of my The Affiliate Code review. If you have not read part 1 yet I strongly suggest you go back and read that first.  For the rest of you, this is probably on your mind [...]

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The Affiliate Code Review – Can Anyone Make Money Doing 'Affiliate Marketing'? Probably The Most Honest Review About This Product On the Entire Internet (Part 1/2)

Edit: The editors at Ezine Articles have made this review of The Affiliate Code a featured article!
Note: If you are here for the value-added bonuses you have heard about, go to The Affiliate Code Bonuses. If you stumbled upon this without knowing what Affiliate Marketing is, check out my Introduction to Affiliate Marketing (important) before [...]

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Drive FREE Traffic to your Web Store using Facebook

Several weeks ago I launched my web store ULTRANEAT selling watches and money clips. My target audience are domestic audiences in my home country, but since my dropshipper ships watches worldwide, I am also accepting international orders. After a few weeks of careful planning and execution, I created a system that goes on autopilot and [...]

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FREE Custom Dials for ArtsNow Watches

Aha! I’ve gotten a couple of questions about how I created some of my watch designs for reselling.

Especially for the one on the left, I’ve gotten questions asking how I make it look like one of those Swiss Army watches. Simple. You go through a lot of trouble trying to find the correct font and [...]

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Making An Online Order Form Using Google Docs (Part 2)

So you’ve decided to streamline your web store’s ordering process but don’t want to use any shopping cart system, or don’t want to spend money on e-Commerce solutions yet. Google Docs offers a free way to collect orders efficiently with a very simple setup. First create a Google Docs account if you don’t already have [...]

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Making An Online Order Form Using Google Docs (Part 1)

Suppose you are running a web store and do not wish to use any e-commerce software at the moment. How are you going to collect orders? One way is to display your email address and ask customers to email you with their orders. Typically you would have a website showing off your products, and probably [...]

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ArtsNow Watches Dropshipped to Myself

My watches from ArtsNow have arrived! First few watches that I dropshipped to myself, just to test for myself whether this dropshipper is reliable. Watches look fair enough and quality is what I expected. Leather watches are of good quality. The metal of the sports metal watch feels a little light and just a tinnnnnny [...]

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