If the irritations of returns, shipping, receiving, handling and inventory are taking over your online business, switching to dropshippers can be a cost effective, sanity-saving light at the end of the tunnel.

Drop shippers are merely companies (usually wholesalers, distributors or manufacturers) who ship directly to your customer for you, saving you the time, fees and office space of acting as the middle man in a buy-sell arrangement. In a nutshell, this means that you can offer a wide variety of products at your website without carrying any stock in-house.

Ideally, dropshippers receive an email from you whenever one of your customers wants to purchase something. For instance, Mrs. Jones wants to purchase an Italian charm bracelet from your website, and makes an order, using PayPal as her method of payment. The bracelet costs $37, plus $6 shipping, for a total of $41. Once you receive Mrs. Jones’ order, you email your dropshipper, advising them of the purchase, along with Mrs. Jones’ shipping information. You also forward on a payment of only $28 to the dropshipper. Since YOUR cost of the bracelet is only $16, and you’ve passed along the shipping costs of $6 to the customer, you’ve just made a $19 profit.

Dropshippers are an excellent alternative for smaller, home-based businesses especially who don’t need or have the space for inventory. Plus, if an item becomes obsolete or out-of-date, you have nothing to worry about since you aren’t carrying any inventory.
Once you’ve found a dropshipper to work with (look at our list of reputable dropshippers here), research the following information closely before entering into an agreement with anyone:

o What is the dropshippers’ return policy? If they do not offer a guarantee, warranty or return policy, look elsewhere.
o How are you going to pay the dropshipper? Some companies offer direct, monthly billing, but most ask for a credit card payment up front.
o What shipping company does the dropshipper use? Do they offer any tracking for their packages? Are there handling fees as well, in addition to their shipping charges?
o What is their complaint resolution policy, or do they even have one? What hours is their customer service department available?
o Take a close look at their wholesale rates, and make sure that you can offer a decent price for all of the items you plan on selling, while still garnering a healthy profit.

Not all dropshippers are made the same, however. There are a few unscrupulous practices out there that you need to avoid at all costs:

Do not pay for a dropshipping list. You can do your own research for a lot less on your own using the Internet.

Do not pay a monthly fee for the privilege of being a dropshippers’ client. The dropshipper should be able to make money from you as you are with your own customers (by selling items at a higher price than their cost), and not by charging you monthly fees for access to their items, database or other services.

Ask for contact information (an email is fine) from several happy clients that the dropshipper works with for testimonials. Also check with the online Better Business Bureau to make sure there are no negative reports on file.
Don’t be afraid to check the validity of a dropshippers’ statements. If they say they are the only source for product A, then check the Internet yourself to make sure.

Just like any online business, using dropshippers to facilitate easier business transactions isn’t something that will just one day make you millions of dollars. However, if you choose wisely, your dropshippers can save you a tremendous amount of time and energy, putting more profits back into your pocket.

Jim Staley is the CEO of WholesaleGopher (www.wholesalegopher.com/), the leading online source for wholesaling, closeout and liquidation sources.

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