Monday, August 2, 2010

Three Stages of Starting a Dropshipping Business and Why They're Important

Dropshippers face some of the same challenges as any other business owner, and dropshipping is an enterprise that involves research and planning, as well as some experience. It's important to fully understand what you will be doing before you start to dropship items. Finding a hungry market is the earliest stage of starting a dropshipping business.

How to Dropship Products: Early Stages

There's no use in trying to drop ship products that nobody wants. Don't set your mind on selling any particular product until you have done sufficient keyword and product sourcing research. One way to see if there is demand for your product is by looking at your competition.

Type the keywords for your product into a search engine like Google. If you see a lot of ads along the right side of the results page, that is a good indicator that there is demand for your product.

You will also need to consult a drop ship directory for reputable dropshippers who would stock and dispatch the products you're trying to sell. Watch out for scams when you start your dropshipping business.

The advantage of dropshipping is that you will not have to maintain any stock at all: you only have to wait for your customer to order, and you collect payment before the product is even shipped.

How to Dropship Products: Middle Stages

You can market your products online by setting up a website that acts as your storefront. Once you start selling, you will see what sells and what doesn't. Offer more of the products that sell well and stay away from products that don't sell.

You may experience delays if your dropshippers don't have items in stock. You must communicate these delays to your customers as soon as possible.

For your website, you will need to use a pre-built shopping cart solution like Zencart or Yahoo Merchant Solutions. Both solutions will let you build an eCommerce site even if you have minimal programming knowledge.

Yahoo Merchant Solutions starts at $39.95 a month and will manage your payment processing for you. You'll need to set up your own payment processing for Zencart, but it's free to use.

How to Dropship Products: Final Stages

Order fulfillment is one of the final stages of starting your dropshipping business. The advantage with having the supplier do the order fulfillment is that you do not have the additional cost of storing the products yourself.

You will also get bulk shipping rates, which may deviate from standard rates by 30 percent or more.

Once you've worked out order fulfillment with your drop shipper, you need to concentrate on pricing. You will be purchasing the products at wholesale prices, and you need to work out what percentage your markup needs to be. Watch out for dropshippers that charge fees, as this will make your products more expensive for customers.

Keep in mind that genuine wholesale dropshippers can ONLY be found in a drop ship directory. A Google search for dropshippers will result in a number of scammers and middlemen who will only con you out of your hard earned money.

By : Helen_M

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