how does drop-shipping work with the supplier?

[duagyeq]

Hi Everyone,

I was wondering how drop-shipping works in dealing with the supplier.

Do you have to buy all the products you are selling online in advance in bulk from the supplier?

Or, does a customer just visit your website, place an order and pay you, and then you later receive a bill from the supplier at the end of the month?

Thanks!

[girish]

Hi,

Not much experience in this, but I had explored it some time ago.

You need "not" buy all the products in advance - that is the greatest advantage of dropshipping - no inventory and no cash upfront.

When customer places an order from your website, you order it to your dropshipper and then pay the amount to him via credit card or based on the terms agreed upon. The dropshipper will directly ship the goods to your customer. Most dropshippers will put your company name on it in the "Send by" field, but you need to check it with the dropshipper. Some dropshippers may have a Minimum Order Quantity restriction based on the goods that are being sold.

I am sure you would have checked about how returns would be handled - sometimes it is tricky and depends on the dropshipper.

Also you need to find a reliable dropshipper with good quality products.

Thanks.

[panorama]

I've been using dropshippers for years and girish is correct...you shouldn't have to purchase any product in advance.

One thing I'd add regarding dropshipping is that you really have to do a lot of research up front. I've used a few different suppliers over the years, and the most important things to consider are:

1) Make sure they keep sufficient stock on hand. I tried adding a new product line a few years ago and had to cancel way too many orders because my vendor was frequently out of stock.
2) Don't focus your supplier search on dropshipping directories. Try to find the businesses yourself. 95% of my dropshipping income comes from relationships where I negotiated something directly with owners of the company. You'll end up with a lot less competition for your products if you take the time to do this.
3) Really understand your profit margins. A lot of people think the key to dropshipping success is to be the cheapest retailer. You have to make sure you can price the product competitively and still be profitable. This ties in with #2, because you'll do better carrying products that fewer people are carrying.
4) This isn't always possible, but try to make sure the supplier doesn't also sell to customers directly. If they do sell direct, make sure they don't undercut your pricing.

I hope that helps!

[serenin]

Thank you so much for the advice, Panorama. Dropshipping is the only online money making that I’ve given up long time ago because I was unable to find a reliable dropshippers.