How to Work With a Drop Shipping Company
Drop shipping companies simplify the process of order fulfillment, stocking or inventory and working directly with manufacturers or authorized distributors. These companies provide sales and shipping for small numbers of items at vastly discounted rates. Unlike standard distributors, drop shipping companies do not require large bulk orders, but also provide less of a discount in terms of initial costs. Some companies may even charge fees for the drop shipping service. Companies looking to work with drop shippers should take care to ensure that the fulfillment of their orders remains timely and offers the same customer service their clients demand.
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Things You'll Need
- Federal EIN or similar business identification documents
- Sales and use tax license
Instructions
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Contact the drop shipping company to open an account and verify their identification requirements. Legitimate drop shipping companies may only do business with other legal companies, not the end user or retail customer. Most require a Federal Employer Identification Number or other operating documents along with a copy of the Sales Tax and Use License for the partner's state.
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Obtain a list of products and manufacturer's suggested retail prices from the drop shipper. Shippers regularly make images, sales copy and other information available for use as well.
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Offer items from the drop shipper's available product list that match the company's current products. Customers typically expect consistently similar merchandise from a company and drop shippers may list hundreds or thousands of related items. Although existing customers will purchase these items from your company, the drop shipper will handle the inventory, storage, packaging, shipping and tracking of the product.
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Contact the drop shipping company to place the order for fulfillment. Include the name and address of the customer. Most drop shippers require payment immediately for this service and ship goods as soon as payment clears.
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Follow up with the client in a timely fashion to ensure her happiness with the deal. Companies working with drop shippers cannot regularly directly intervene in the shipping and fulfillment operations. Instead, following-up with a telephone call or email to the client gives the company valuable feedback about the services provided by the drop shipper.
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Tips & Warnings
Watch inventory levels at the drop shipping company. Those with regular orders may sell out quickly and face inventory levels when multiple companies order the same item for their customers.
Many drop shipping scams exist. These range from fake drop shipping companies that keep money without shipping product to bait-and-switch operations which may send out counterfeit or off-brand merchandise. Check with local or federal resources, including the Internet Crime Compliance Center or Better Business Bureau, to verify the accuracy of the information provided.
