What is Dropshipping?
Dropshipping is a specialized distribution arrangement between a manufacturer, wholesaler or distributor of a product and a retailer whereby the retailer markets a product directly to the consumer without carrying any inventory. Generally, items that are dropshipped are sold on EBay, other auction portals or ecommerce websites.
The Internet Age has given rise to increased competition in many industries – at least with respect to web-based commerce. Online platforms such as eBay have allowed for the development of ‘cottage industries’, such as electronics, custom products and big-ticket items.
Why Dropship?
Dropshipping, when executed well, benefits each member of the supply chain. Because products must only be warehoused once, less inventory cost is associated with each item, and thus, less cost must be passed on to the consumer for this item (theoretically).
Dropshipping wholesalers benefit from this type of relationship, as they are able to charge retailers a premium for the dropshipping service they provide.
Retailers, of course, benefit, in a few obvious ways. First of all, a dropshipping business requires less money to start up than one in which a large amount of inventory must be held. This allows for quicker and easier entry into the market.
Secondly, by eliminating the need for inventory, a dropshipping account allows a retailer to reduce ongoing operating costs in the long-term.
Ideally, all of this increased competition benefits the consumer as well in the way of more choices and decreased prices. The bottom line – dropshipping – when executed well – greases the wheels of the supply chain and benefits wholesalers, manufacturers, distributors, retailers and consumers.
Who Dropships Their Products?
Many product manufacturers and wholesalers dropship their products directly to customers, but finding them can often be a difficult process. These are the the steps we recommend taking to find qualified, legitimate dropshippers of products:
- Perform original research: Utilize Google or other search engines to search for Dropshipping Wholesalers or dropshipping manufacturers within a particular industry. Be careful and vigilant, however, as many search engine listings (both paid and unpaid) for dropshipping-related terms are scams and you do not want to waste your valuable time and money with them. Ask a lot of questions and if it seems to good to be true, it probably is.
- Use ThomasNet, considered the most comprehensive directory of suppliers of industrial products and services in North America. The site is free to join; search and contact manufacturers of wholesale products. You’ll have to ask explicitly if they dropship, as the directory is not specific to dropshipping businesses.
- Purchase a membership in a quality dropshipping directory:
- WorldWide Brands: Read our Worldwide Brands Review for more information on membership in the directory. It’s a valuable investment for those serious about online retailing.
- SaleHoo: A solid choice for beginners, second only to WorldWide Brands