Drop Shipping

Let others do the heavy lifting while you market to customers
By Jackie Larson Drop shipping is a way to send goods straight from your supplier to your customers online — without some of the risks normally associated with having a store. For example, with drop shipping you don't have to pay for goods until they are sold, thereby reducing a common financial risk for retailers.

More than simply reducing risk, however, drop shipping can enhance existing brick-and-mortar operations with valuable partnerships and improved customer service. Get started with three easy steps:

1. If you don't already have them, get a business license and tax ID number, as a drop-shipping business must be treated as a real and legitimate business — complete with all the tax and legal precautions that you would take in opening a traditional business.
2. Choose reliable wholesale drop shippers and surefire products that will sell in volume and which have wide appeal.
3. Market your drop-shipped products on your own Web site and on Internet auction sites such as eBay, leaving you with immediate profits before you even buy anything.

Forge relationships with wholesale drop shippers

Your expenses may include sign-up and drop-ship fees to the drop-shippers' sites, and possibly a membership fee.
Try:  Compare drop shippers' services and costs at Dropship Review. Some popular sites are Doba, Worldwide Brands and Dropship Direct.

Select products worth marketing

Because the drop shipping process eliminates big-order discounts, look for maximum margins by selecting products that are heavily discounted to sell in quantity. Selling a consumable product can create ongoing demand. You may find more unique goods from companies with fewer than "hundreds of thousands" of products. Keep your customers with good customer service and follow-through.
Try:  E-commerce wizard Wes Shepherd offers how-to guidelines at Channel Velocity. Find drop-shippers by product category at Drop Ship Locator.

Develop your Web site or auction site

An integrated e-commerce Web site will allow you to do everything from ordering inventory to processing PayPal payments online.
Try:  eBay's Seller Onramp offers tutorials on getting your eBay business started. A widely respected e-commerce expert, Chris Malta of Worldwide Brands, offers a free e-book on the topic, too. And finally, Ecommerce-guide offers tips for choosing the right products to sell online.

• Choose wisely. Select your drop-shipping partners carefully by reading reviews. Make sure they're not just one in a line of middlemen, which will add cost to your product.
• Self-promote. Use articles you or others write on your Web site to attract readers and position yourself as an expert.
• Do your homework. Advanced searches will help you find and sort products based on price, brand name, suppliers and other features.
• Stay in touch. Some drop shippers will provide email alerts to let you know when orders have been received and when merchandise leaves the warehouse.