How to Start a Wholesale Distributing Drop Shipping Business Step-by-Step

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Starting a drop shipping business is not difficult.
Starting a drop shipping business is not difficult. (Image: shipping dock image by Neelrad from <a href='http://www.fotolia.com'>Fotolia.com</a>)

If you want to start a business with very little startup capital, a decent turnover and minimal risk, drop shipping may be the way to go. Thanks to the Internet, drop shipping has enabled the middleman (you) to eliminate the financial risk of carrying large amounts of stock by having the wholesaler ship the product directly to the consumer. This means no more juggling your cash flow, no more chasing after debtors who won't pay up and no more overdue accounts to give you sleepless nights while unsold stock is piling up in your store room. The world of e-commerce lies at your feet -- ready for you to take the first step.

Research the products you are planning to sell. Choose products you have knowledge about, to avoid uncomfortable situations where prospective clients might ask you questions you are unable to answer.

Set up your own Internet shop, rent a space in a successful web store or sign up on an auction site such as E-bay. The benefit of the last two options is that the number of daily customers they have already established far exceeds what you will be achieving with your own store in the early stages. The downside is that you will have to pay royalties to those sites.

Search for wholesaler distributors who are willing to do drop shipping. Several directories are available online that will supply you with contact details for drop ship wholesalers. Do an Internet search using your chosen product and the words "wholesale" and "drop ship."

Contact wholesalers through e-mail or by phone to compare prices as well as shipping costs. Before making your final decision on which wholesaler to deal with, check the wholesalers' online reputation.

Obtain images of the merchandise–people tend to buy what they see. Images of the products will most likely be available on wholesaler or manufacturer sites, but be careful not to violate copyright laws when downloading images to use on your site. Instead, obtain a sample of each product and take your own photos. This will set you apart from your competition; who will most likely be using the manufacturer images.

Publish your products in your web store. Advertise your store through different media to attract prospective clients. Once you have established a market, you can start expanding your product range.

Tips & Warnings

  • Wait for payments from clients to clear before placing orders at your wholesalers.
  • Send all your daily receipts and order slips to your distributor via email. It is the distributor&rsquo;s task to ship these with the packages.
  • Should an item ordered by customers be out of stock, contact them immediately to inform them about the delay. Be specific about when the item will be available again. Avoid losing valued clients by keeping communication optimal.
  • Make sure you have a contract in place with your wholesaler in which shipping fees and payment arrangements are clearly outlined.

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