If you are looking to pursue dropshipping business opportunities and are a little overwhelmed by the whole situation, this concise guide might be for you. Dropshipping can be a good side job to make some extra money. Most importantly, your dropshipping business can be managed only by you, using nothing more than your computer and internet connection.

One thing is clear: This is a very low-risk business because you do not actually have to buy your items until you sell them online to your own customers. You do not even have to stock your items yourself, which saves you from taking the inventory risk. New retailers used to be forced to take the risk to purchases extensive amounts of new products, with no guarantee that it would ever sell. In a way, dropshipping allows smaller online retailers to compete better against bigger retailers, who can afford to put in a lot more of their time, labor, and money into their business.   As a result, drop shipping method is perfect for new online retailers.

Check out my previous article on where to look for drop shipping business opportunities.

Let`s take a look at this concise step-by-step guide to get started with your dropshipping business.

Finding Your Dropshipping Supplier(s)

Finding an ideal dropshipper is the first step you have to take towards a successful dropshipping business. However, it is not a decision to make lightly. Your supplier`s reliability will directly affect your performance. Thefeore, this decision requires hours of research to find true hidden gems that may not easily show up in the search engines.

Dropshipping suppliers are companies that buy directly from the manufacturer and deliver products to your customers, using blind shipping method. Basically, the package only has your information instead of the supplier`s information.  Good drop shipping companies will offer products at real wholesale prices. Then, the retailer might list their products online with retail prices depending on the availability of the product in drop shipping supplier’s products. Reliable drop shipping companies may charge you a monthly or annual fee so that they can provide you with the best service and latest data. On the other hand, some dropshipping suppliers with no charge are very likely to add overhead costs to their products to make their profits. In that case, they will not be able to offer you real wholesale prices with significantly reduces your profit margins.

Because wholesale dropshipping companies are large businesses that ship a lot of packages every day, they negotiate shipping rates with carriers. As a result, they can offer you lower rates than the ones your small or medium business can get. While choosing a supplier, you must take their shipping cost and time into consideration.

Overall, finding a supplier is not a walk in the park. It may take a lot of effort but once you find the right supplier for you, it`ll be worth it.

Selecting on an E-Commerce Marketplace

Now that you have decided on a supplier, it is time to choose your online marketplace. In your marketplace, you will be able to sell the products that are available in your suppliers` inventories. You can list these products in online marketplace at retailer prices. Once your customers buy them, you will redirect to order to your drop shipper. They will take care of the rest. You will only pay real wholesale prices.

When opening a traditional brick and mortar store, a lot of thought goes into issues like location, theme, prices etc. It is not any different for online stores. The biggest issue here is to bring traffic to your new online store. You could simply purchase click ads. On the other hand,  you can also use SEO (Search Engine Optimization)  strategy as a  cheaper alternative to the advertisement. You might want to create quality content to engage your customers while optimizing them to appear in the first pages of the search engines.

Selling From Your Own Online Store

If you choose to sell on giant e-commerce marketplaces such as Amazon and eBay, you should strive to get good seller`s rating and aim for the buy box to get more traffic. But, of course, you would have to have at least some traffic before you get there. Both on eBay and Amazon, your listed products can reach to their enormous marketplaces. That means you may cut down on a great deal on marketing expenditures.

You may also choose to open your own online store, which is independent. Selling in your own online store comes with a lot more freedom when it comes to what you want to sell, branding, and various regulations compared to drop shipping on eBay or Amazon. However, it also means that you would have to be your business with much less of a market share. This is because millions of people go to Amazon and eBay for their online purchases.

Creating your own online store would require more capital, marketing, and risk. On the other hand, if you have the necessary skills, time, and investment, you might be able to make more money than you could by selling on other e-commerce platforms in the long run.

Getting a Resale Certificate

Depending on your location and the destination of your shipment, you may have to collect sales taxes from your customer. In order to to collect sales taxes, you will need to apply for a resale certificate from your state. To find out how you can obtain a resale certificate, visit the website of your state tax department. If you operate from the U.S., you may not be able to open an account with a legitimate drop ship supplier until you have your resale certificate. This is because most suppliers require you to have a certificate, before you can sign up to use their services. We have explored the very basics of starting your dropshipping business. To apply for a resale certificate, you may need Federal Tax ID number or EIN.

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