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What is dropshipping & how drop shipping works

 Written by Matthew Hansen

1. Choose which product to sell

The first step is very important and must be carefully decided.  There are many factors to consider such as popularity and profitability.  You can get lots of great ideas and see what is popular by visiting sites such as amazon & ebay.  For this example, let’s say you want to sell product X.

2. Find a supplier that will drop ship for you

From using a supplier list you have either purchased or researched find a company that drop ships product X.  For example, the company offers you product X for $50 and the going price is $70, giving you a mark up of 40% ($20 profit per sale).

It’s a good idea to read all of the terms & conditions of the drop shipper and have a good look through their site.  You should feel comfortable with the drop shipper and confident in their reliability before starting business with them.

3. Open an account with the drop shipper and payment processor

Contact the company that supplies product X and open an account with them.  Most drop shipping companies work with international customers, but there are still some that do not.  Now is the best time to ask any relevant questions about membership fees, where they ship to, shipping costs etc.

Depending on where you are selling your product you have a few options as to your payment processor.  If you are using eBay then PayPal is probably the best.  However, you may want to research some alternatives.  It’s very important to find out how the payment processor is going to protect you as a seller against fraudulent buyers.

4. Setup an auction to sell product

Now is the time to sell the product on eBay, other online auction, or your own site.  Make sure you have done some research on the product, know how much it sells for, how popular it is, and how other people are selling it.  There are various auction selling strategies you should employ to ensure you receive the highest price possible.

The minimum price you should sell for is the drop ship price + shipping costs.  This is a good price to start your auction, however if you are more confident you could start the auction at the ever popular $1 no reserve.  Remember if the item sells less than the drop shipper charges it comes out of your pocket!

5. Sale Success – the product has sold!

In our example, product X sells for $70 on eBay and the buyers pays you with PayPal.

PayPal allows your customer to pay immediately, so you receive the funds straight away and can place the order with the drop shipper immediately.  Again, make sure you are protected against fraudulent buyers.

6. Place the order with the drop shipper

After the payment has been received contact the drop shipper as soon as possible.  The drop shipper will then send the order to the customer under your name and address.  Remember to keep all emails, receipts, and proof of postage whenever possible to protect yourself against any future problems.

7. Contact customer after sale and follow up

As soon as you have been paid, thank the customer and let them know you are processing their order and you will contact them again very shortly.  You will save a lot of time if this first email is automated.  After the dropshipping company has confirmed the order and let you know the order is in the mail, contact the customer again letting them know their purchase is on its way.

Remember, if there is a problem with the delivery or product then you will be held accountable, and your reputation is on the line.

Customer service is the most important part of this business so make sure you always send a follow up email.  Your goal should be repeat customers.  You want the customer to deal their friends and family that you provide great products and excellent service.

To provide excellent service, you must have good communication with the customer.  Let them know the product is in the post, and for them not to hesitate to ask any questions or feedback.  Say you are committed to quality customer service and you will do your best to resolve any problems.  Invite them to visit your eBay store or website for more great bargains.

Visit our eBay store for more information