Given below are some of the FAQ's and their answers about
drop shipping. Check them out to get a brief description on drop shipping.
Q: What is the meaning of the word 'Drop Shipping'?
A: Drop shipping essentially means that you conduct a trading business without
maintaining any stock. You only forward the order placed by your online customer
to your 'drop shipper' who in fact, stocks that item and also ships it to your
customer.
Q: What do I need to start this business?
A: A computer with an Internet connection, one or more drop shipper and a way
to advertise the drop shipper's stock under your company's name like eBay or
your own Website. Also get the necessary permits and license to run your business
from the concerned authorities.
Q: How and when do I start making money?
A: You will have to add your profit margin to the rate of the product, which
your drop shipper has quoted, before you advertise that product on the Internet.
Once you have accepted your customer's order and collected his payment, you
will have to forward that order and also make your payment to your drop shipper.
The difference in your drop shipper's rate and the rate at which you have sold
the product is your profit margin. You start making money from your first order
itself.
Q: How do I know what rate to quote for the product?
A: You can check out similar products being offered on the Internet. Then compare
that rate with the rate offered by your drop shipper. You can then quote a rate
based on this information.
Q: What do I do once I get an online order from my customer?
A: You accept the order and collect the payment from your customer via credit
card or PayPal and then forward that order to your drop shipper, who in turn
will arrange to ship that product to the customer's address provided by you.
Q: How do I get hold of a drop shipper?
A: You can find them over the Internet or through sites related to eBay. You
might have to become a member and pay a membership fee to get access to that
list. Once you get a list, then you can check out the drop shipper's product
line-up online. Choose a drop shipper who can also be contacted over the phone
24/7. Check out his reputation by contacting the manufacturer directly.
Q: What are the plus points in drop shipping?
A: You do not have to maintain any inventory. You also do not have to worry
about dispatching your goods. The initial investment, overheads and the overall
risk factor are very less.
Q: What are the minus points in drop shipping?
A: Your margins are limited since you have to quote on the rate that your drop
shipper quotes to you. Your reputation could be damaged in case your drop shipper
does not deliver on time or delivers products of bad or doubtful quality.
