Import From China Business

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A practical guide for starting a small business

What is Drop Ship?

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

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Drop Ship Agreements

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:

  1. Payment for goods is not required until a customer order is placed.  
  2. There are no inventory and warehousing costs for the dealerships.
  3. Save on the cost of packing materials especially for larger items.
  4. No packing labor costs.
  5. 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.  

  1. 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.  
  2. 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.
  3. 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.
  4. 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.
  5. 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:

Dropshipper Network

This is the number one Asia Dropshipper that specializes in dropshipping of consumer electronics products.

http://www.dropshippernetwork.com/


DVDdropship

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.

http://www.dvddropship.com/
 

Drop Ship Area

This is a website that assists entrepreneurs to generate online income as a full or part time activity with the help of dropship business model.

http://www.dropshiparea.com/


Doba

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.

http://www.doba.com/
 

Dropshippers

It offers access to millions of wholesale products drop shipped directly to retailer's customers.

http://www.dropshippers.com/