Drop Ship or Dropship is a method of increasing the profits of your import from China
business. Drop Ship is simply when a supplier ships the order to someone else instead
of the person making the purchase. For mail order or internet based import businesses
which cannot afford or do not wish to carry inventory, Drop Ship provides an excellent
alternative to get into the import from China Business. Drop Ship is also a way
to test certain products before the importer decides to carry the product in the
inventory. Many suppliers are willing to offer dealership that gives the importers
the right to sell their products.
Drop Ship procedures and agreements are fairly simple. The importer or dealership
will find customers who will purchase the product. When orders are obtained, profits
are deducted from the customers' payments. Profits are typically in the 50% range.
The importer or dealership will send the remaining money and the shipping labels
to the drop shipper. The supplier or drop shipper then sends the product directly
to the dealership's customers. According to the customers, it appears that the product
is sent from the dealer or importer instead of the supplier or drop shipper.
Most Drop Ship suppliers will charge a small fee for an importer to be a dealer for
their products. The Drop Shipper’s role is to provide the dealers with camera ready
circulars, pictures of the products and other materials for advertising and promotional
purposes. The dealers are responsible for the customer acquisition costs as well
as printing, advertising and mailing costs.
Drop Ship Advantages
The major benefits of acting as a dealer for a Drop Ship supplier:
Payment for goods is not required until a customer order is placed.
There are no inventory and warehousing costs for the dealerships.
Save on the cost of packing materials especially for larger items.
No packing labor costs.
No worry about damaging the goods or having the goods stolen while in the warehouse.
Drop Ship Disadvantages
There are disadvantages to the Drop Ship business.
Your reputation as a retailer will be dependent on your Drop Shipper supplier. If
the product runs out of stock or is shipped late, then your customer sees you as
delivering a poor customer experience.
With drop shipping, the supplier has access to the dealer's customers. It is the
Drop Ship supplier who sends items to the customers. The Drop Ship supplier can
directly market to the customer after the initial shipment. The same product or
other related products that the supplier carries can be offered.
For most items, shipping bulk to the dealer is always cheaper than sending the items
one at a time to the customer. The type of product itself will dictate whether drop
shipping is cost effective. For smaller items, it is more cost effective to ship
in bulk but for larger items, drop ship is a more cost effective alternative for
everyone in the supply chain.
The product that you want to import from China may not be available as a Drop Ship.
Selling products should be based on profit potential not the delivery method.
Expansion could get complicated. Managing one or two Drop Shippers may seem fine
at first but if you start expanding your product line to ten or twenty Drop Shippers,
it will add significant complexity to your business.
Selecting a Drop Shipper
Choosing a Drop Ship supplier follows the similar rules as finding the right import
supplier. You'll need to do your homework and investigate the company to make sure
that it is indeed a legitimate business. Ask to speak to other dealers if possible.
Most Drop Ship suppliers will charge a dealership fee as a standard practice. However,
beware of Drop Ship suppliers who force the dealers to buy sales materials and mailing
lists from them. Such companies are more interested in making profits from dealership
fees and the sale of promotional materials than selling their legitimate products.
Finding Drop Ship Wholesalers
Here is a list of resources for finding Drop Ship Wholesalers:
This is the number one Asia Dropshipper that specializes in dropshipping of consumer
It is a membership based website that competes on volume purchasing for the benefit
of offering a dropshipping service to individuals and companies. The company claims
to have buying power which gives members the advantage of purchasing products at
low market prices.
This company helps retail entrepreneurs and small businesses gain access to a consistent
supply of wholesale, drop ship products to sell online. Doba simplifies product
sourcing by providing access to millions of products, through a network of wholesale
suppliers and manufacturers.