April 14, 2008

Dropshipping


One of the easiest ways to make money via eBay through what I call ‘The Wholesale Route’ , is playing the dropship game. To dropship (or droshipping) is the act of selling wholesale items without them ending up in your house, cluttering up your space.You see, when you dropship, you advertise the product that you are sellling on eBay, with your version of the retailprice-and then someone bids or buys the item. You then send your order to the dropshippers, who will take their wholesale price cut, and then ship the item off to the seller. Of course, they will take their shipping cut, also-so you really want to make sure that the shipping is on top of the product. But in the end, you sel an item, the item never goes anywhere near your house, and you don’t end up paying a cent. And of course, another big advantage of this system is that you don’t have any unsold stock, off-site or otherwise.


In addition tothese advantages, following price and effectiveness-you also have the added bonus that the moment you realize you have a product available to you, you can list it on line. This means that you don’t have to sit around waiting for the product to be shipped to you so you can sell it. Be careful with this though, make sure that the dropshipper you choose definitely has the products you want to put up-but nine out of ten times your product should be available and you shouldn’t have to worry about putting it up on line.


There are of course, small problems with the drop shipping business model. First of all, you will probably find that this method of sale will only get you small amount of money. So, you will have to start putting your items in bulk on eBay-again, this costs you per item., so you have to be careful to pick your items to sell, making sure that your item will sell otherwise you have lost the money you put it up to eBay for in the first place. This is why I recommend selling high cost electrical goods, like mobile phones, computers, TV’s, etc-as you can ussually get these at good wholesale prices (ie.maybe a good 1/8 less than the average price), and using say an Plasma Screen TV as an example, you could get one on wholesale price for about $2500, which we’ll say is saving about $700 dollars off retail price. So, the retail price is $3200-we have to make it worth the customer’s while and worth our while.


So we take our item, and we find out how heavy it is, and how much it will cost to ship. One of the follies of drop shipping is that your product is invariably going to be in another country, so say your TV is being drop shipped from Hong Kong-and will cost $150 to ship. Using this example, we need to again still make it worth their time and money to buy your fabulous item instead of the one that they can get down at Harvey Norman for slightly less hassle. So the retail price is $3200, the shipping is $150, and the wholesale price of $2500. If we say set the price to $2900, we would be set to make a $300 profit off of the sale, but there’s a good chance that the customer won’t buy it bacause the savings the make, plus shipping, aren’t that great. So the folly here is that you have to balance your profit margin with your chance of sale. In my experience, if you dropped that price by a hundred dollars, abd say you sold 5 of these TV’s on eBay-you would sell all of them. Whereas you might sell 2 of them with the higher price, but you end up having to pay for the unsold TV’s eBay fees, and in the end you will make amuch better deal for yourself sacrificing abit of profit for a lot of it.


As you can see, with a bit of work, this is a wonderful and easy way to make profit on eBay, probably the easiest of the lot. But is it safe, and is it worth it? Like many get rich quick schemes, there are a number of traps that you can fall prey to if you are not careful.