Want to know what drop shipping is?? Let’s take a quick view of item distribution first.
Okay, pretend Saturn Computer Mfg. makes a product called Saturns Titanium Processor. This processor of Saturn is very popular amongst the computer industry and it will undoubtedly speed up the performance of any home computer immensely.
Saturn Computer Mfg. builds the titanium processor, but they dont publicly sell it to people. They are basically a manufacturer that makes computer components. There is no way that they could publicly sell their products while spending loads of time making great products like their processor. So, they distribution of their product; basically they need companies that will take their Titanium Processor and distribute it to places (stores) that will sell them.
For a long time, Saturn Computer Mfg. has sold their Titanium Processor to JimBobs Distribution. JimBob Distribution buys Saturns titanium processors by the truckload. They are Saturns number one distributor. JimBob Distribution pays $75.00 per processor, which is a great price for the product. That price is essentially called The Manufacturer Wholesale Price.
However, JimBob Distribution doesnt sell this processor to the overall public either. Theyre called a Distributor. Jim Bob Distribution distributes Saturns Titanium Processor.
So, what happens now??
JimBob Distribution contracts with a number of retail stores, particularly a chain called JoJos Electronics World. JoJos originated from a retail entrepreneur who saw a great vision and the huge potential of computer processors. Currently, there is a JoJos Electronic World on every street in every major city in the United States. JoJos Electronics World buys huge cases of Saturns Titanium processor from JimBobs Distribution for 125.00 a processor. So, JimBob Distribution makes $50.00 on every Titanium Processor they sell to JoJos Electronics Worlds Retail Stores. ($125.00 – $75.00 = $50.00)
JimBob Distribution is very, very happy about this, basically because JoJos Electronic World buys lots and lots of Saturn Titanium Processors.
Boxes upon boxes of Saturn Titanium Processors show up in the inventory rooms of JoJos Electronics World everyday. JoJos employees open up these cases, and take out 20 processors out of each box. With their price guns, the employees of JoJos stick a $190.00 price on each Saturn Titanium Processor. So, JoJos makes a total of $65.00 on each processor sold in their retail store. ($190.00 -How much they sold the processor minus what they paid for the processor $125.00 = $65.00).
So, JoJos Electronics World is even happier then JimBob Distribution.
The people that buy the processors from JoJos Electronics World are also very happy. They own a great, top-of-the-line processor, and think they have paid a great price for it. So, everyones just happy, happiness everywhere.
Thats product distribution in a nutshell. The manufacturer wants someone to sell their products, so they sell to a distributor, that distributor then sells to a retailer, and that retailer then sells to a consumer (the end user). The Manufacturer, the Distributor, and the consumer are all happy because the end user is willing pay the price for the product. Drop Shipping has been in existence for a while too.
So, weve already talked about the manufacturer, distributor, and the retailer relationship. When you employ drop shipping to sell products and things on the Internet, (or maybe somewhere else), YOU become the ultimate RETAILER.
For descriptive purposes, there are two types of retailers. There is a retailer who physically stocks products in their inventory, and there is a stockless retailer. Drop Shipping means that you are essentially a stockless retailer.
Retailers that Physically Stock Inventory
Lets say you want to open your retail store online. Lets also say you are hell bent on stocking your own physical products. Here, youre either going to have to own a huge, luxurious and spacious garage or youre going to have to rent a warehouse. Plus, youll have to setup a Fedex, DHL, or UPS shipping account in order for them to ship out your products for you. Thats of course if you want to do all of this yourself: stock, package, market, finances, and business management. You know what the worst part about this is?? Youre going to have to pay thousands of dollars up front to stock any products in your physical store.
Money, Mulah, youre going to need a bunch of it to start an online, physical retail store this way. I bet you didnt come here to find out how to do that. For example, lets say you want to stock GPS radios or Infrared Radar Detectors, what company would you contact for this?? Hmmm, Whistler, Escort are some brand names that come to mind. Go ahead and call up one of those companies and ask them what their minimum order is to setup a wholesale, retail account. I could be wrong, but Im guessing around $80,000.00 and up. Thats eighty grand everyone. I dont know anyone that physically stocks radar detectors and sells them outside of Wal-Mart or Academy Sports. I sure wont.
Physically stocking products costs some dough, theres no way around it really. Basically, you have to put up towering amounts of money at first and pray that people will buy those products from you (sitting in your garage).
Okay, the much, much better method . (Drop Shipping)
Inventory-less Retailing (Drop Shipping)
So were finally getting to the point of your reading of this instruction. Basically, when it comes to drop shipping, a company ships out products for you one-by-one to the customers you sell the products to.
Heres Drop Shipping 101:
1) You establish an online presence, either by your own Online Store or through a portal like EBay or Yahoo, but you have to be able to accept debit or credit cards.
2) Find a distributor, a drop shipper that will drop ship products to customers you sell to. The best place in the world to find dropshippers is www.WorldwideBrands.com. This is a site that pretty much scours the country in search of any and all drop shippers that will dropship products one-by-one to people for online retailers.
3) Once you find a dropshipper, you have to signup for a retailer account with that distributor.
4) Your distributor gives you access to their products, specifically theyll let you use their product descriptions and pictures in order to sell their products. You in turn post this exact information in your online store.
5) Someone is browsing around in your store; all of a sudden they click the Buy It Now icon and purchase a leather jacket from you for $185.00. Your site then automatically charges them a shipping fee, lets say $15.00.
6) Youve made a sale. So now you email your dropshipper with your customers information, their name and shipping address.
7) That leather jacket is sent directly to your customers door with YOUR sites name or store name on the packaging.
8) The dropshipper then invoices you a wholesale price of $125.00 for that leather jacket, plus the shipping.
9.) Your customer then is very happy, they have a new leather jacket from what they see as, a reliable online store and tell their family and many friends about their experience.
Boom!! $60.00 in profits from one item. What did you do?? You sent ONE email. No warehousing, no stocking your dirty garage praying that you would sell your entire inventory. Crazy dont you think?? Honestly, people still dont believe me when I tell them that I do this.
Easy money a child could make. However, remember that in order for this to work, you need to work with only RELIABLE, good distributors that will do drop shipping. Thats why I recommend www.WorldwideBrands.com.