To unlock the more articles, and further exclusive content,
The drop shipping business model consists of you creating an online eCommerce website/marketplace that allows online traffic to click “buy” on a product. Once this occurs, you will order that product from a manufacturer or a wholesaler. They will then grab the requested product, package it, and ship it to the customer. Your profits then come form the [price of the product] – [cost of product/shipping from the manufacturer or wholesaler].
The Pros of Drop Shipping
Their are multiple pros to this type of business. One, you do not deal directly with any of the products you are selling. This is a huge upside, it means that you do not have to buy a warehouse and keep track of thousands of products. All of that work is dealt with buy the manufacturer/wholesaler. Two, their is low overhead cost. Since you are not paying for housing any of the inventory, you only have to pay for website operations and the wholesale price of the goods, which you would be doing anyway with brick and mortar business. With drop shipping, you can access profits without the hassle and cost of holding real inventory. Three, you are free to try out a number of markets. Since you are not carrying inventory, if the items you currently display are not selling, you can experiment into a new market. Simply establish a new stream of inventory through a new manufacturer/wholesaler, and you are set to experiment!
The Cons of Drop Shipping
One, profit margins are low. Like we said before, profits come from [price of the product] – [cost of product/shipping from the manufacturer or wholesaler]. The manufacturer/wholesaler will not sell and ship your products for dirt cheap, meaning you only make money on the size of your markup from this price. Usually, for your retail price to be at the market clearing level this margin is relatively low. Two, since the drop shipping model is so easy to implicate, markets typically have dense competition. The low overhead, easy-access, hands free perks have attracted many drop shipping businesses. Third, you have little control over the quality of the products/shipping from the manufacturer/wholesaler. These people do make mistakes, and as the drop shipper, you are responsible for dealing with angry customers who have received ruined, wrong, or low-quality products.
Diving headfirst into drop shipping seems daunting and complex. Luckily, the internet is stock full of mentors who can provide you the valuable information you need in order to succeed. Many seem like scams, schemes, or fakes. Do not waste your time. Do not make the critical mistakes that we, and so many others have taken.
Click below to unlock our recommended list of free and paid information, reviews, testimonials, and forums. Ensure that you are making the best decisions in starting your Affiliate Marketing Campaign.