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‘Drop shipping is a supply chain management technique in which the retailer does not keep goods in stock but instead transfers customer orders and shipment details to either the manufacturer, another retailer, or a wholesaler, who then ships the goods directly to the customer.’ (Wikipedia)
Now here is the cool part that makes Drop Shipping a super easy business to start at a super low budget (almost zero investment upfront).
When a ‘store’ ( i.e you ) sells an item with Drop Shipping, it actually just forwards the order to a 3th party , who fulfills the order and sends the product directly to the your final costumer.
Let me give you a three step, easy example so you can understand exactly What is Drop Shipping and how easy you can start making money with it. For this example we will use Amazon and eBay that are probably the most popular scenarios for Drop Shipping .
Step 1 : You find something interesting on Amazon at a good price, lets say $40 including shipping (in next articles we will give you more details on how to find good items to drop ship).
Step 2: You create a free eBay sales page for that item ( this is called Listing on eBay ), and put the price for this item at $49.
Step 3: Someone buys your item on eBay (The cool thing here is that after you learn how to create a listing correctly , eBay send you FREE traffic to your lists ), and pay you $49.
Step 4: You buy the item on Amazon and send the item directly from the Amazon to your customer.
You make a profit ! As Simple as That ! Cool AHA!!!
( Note that there are some fees for PayPal / eBay / etc )
Advantages of Starting a Drop Shipping Business:
Super Low Costs: Depending on what sites you are using for drop shipping you can start your business at a very low or even at zero cost. You can sell hundreds or even thousands of items with absolutely ZERO stock in your house or warehouse!!
Easy to Implement: Since you don’t need inventory, you only need a supplier (like in our example you can just open a free account on Amazon), a website or an eCommerce site where you will put your items for sale (again, you can just start a free account on eBay ) and you are ready to go .
Very Small Risk : Since you don’t have to invest in stock, in an online platform or in anything else, there is very little risk in a drop shipping business.
Easy to scale: Since most of what your are doing is just forwarding the orders to the supplier / manufacturer you can scale it very easily.
Work from wherever you want: The only thing that you need is a internet connection, as simple as that. Actually if you use the correct software for automation you can even got most of the work done for you ! Therefor you can work from home in pajamas, from the airport on the way to vacation or even from the beach.
Disadvantages of a Drop Shipping Business
Since you don’t hold or control the stock (which is a cost-advantage), you need to be constantly monitoring your suppliers for stock availability and price changes ( but this too can be handled by the right software).
What is Drop Shipping, or more important can you make a nice income on that ?
Well, drop shipping is definitively an easy way to start a online business . Like any other real business it’ll take sometime till you will start to make a descent ammount of money.
So if you are looking to an extra hundreds of dollars or even a few thousands definitively , we know people that have done that using the drop ship model.