What is dropshipping and how does it work?

March 9, 2009 by

The creation and running of dropshipping websites is a method of making money online that is popular and very well established. It provides many thousands of people with both side and full time incomes every week. But despite its success many people considering starting up an online business are unaware of just what dropshipping is or how it works.

What is dropshipping?

Dropshipping is an incredibly cheap and easy method of creating an online retail outlet without the capital needed to buy stock, hire employees or pay for storage facilities. It retains the ability of any retail site to generate large levels of income, but without the risk that is inherent in capital investments.

You are able to dropship almost any product, with huge numbers of specialist dropshipping companies as well as wholesalers and manufacturers who offer dropshipping services with a bit of research you should be able to find a company offering any item you want to sell via dropshipping.

Basically you act as a middleman, advertising the dropshipping companies products, at a considerable mark up for yourself, and then when an order is made you simply pay the dropshipping company their cut and they will deliver the item to the customer.

How dropshipping works.

The idea behind dropshipping is that you offer for sale, either via your own website or established sites such as eBay, items for sale that your dropshipping company is offering. You mark up the price that the company charges – this will be your profit – and sell it to the general public.

There are websites that sell hundreds of items via dropshipping, or just one, how you do it is entirely up to you. The most important thing for you is that you are paying nothing out until you have already been paid the money by a customer, so huge catalogs of items wont cost any extra.

When the item is sold you then place an order with the dropshipping company (or have automated software do it for you) who will deliver the item, often with your own branding, to the customers postal address. They manage the delivery, stock control, back end functions, etc. The end result means that you don’t have to buy or touch any stock at all.

Comments (2)

 

  1. Grace says:

    This is a great, simple emplaination of dropshipping, good job! However, I noticed some important information that is missing here… how do you find dropshippers like these? I am asking because I know that this can be so incredibly difficult and time consuming if you are not an expert in the field, which is why I am currently using a dropshipper directory.

  2. Dropship businness sounds great. Resellers seem have zero danger. I would like to have a try.

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