Get Paid to Dropship

Update 2019 - I am no longer a fan of dropshipping. If you come across this page, you should realize that I have changed my position. The information below was written before I learned about the inner workings of the dropshipping business model. I am keeping the page active so you can learn about the business model.

Did you know you could get
paid to dropship?

Wait! You don't know what dropshipping is?

Or perhaps you've heard the term but weren't really familiar with what it was.

I will be exploring dropshipping in this article to not only help you understand what it is, but to help you determine if you should implement it.

Grammatical Side Note: The word dropshipping does not appear to be a single word. Officially, it is drop shipping. But it is always referred to by most as a single word. In fact, a quoted Google search for "dropshipping" brings up many more results than a quoted Google search for "drop shipping". It's the other way around for a quote Bing search. I will be using "dropshipping" throughout.

Dropshipping Defined

When a vendor chooses to incorporate dropshipping, they are not holding any product in inventory. Instead, when they receive an order for a product from a customer, the vendor will order the product from a third party supplier and that supplier will ship the order to the customer. The vendor charges the customer a higher price than the supplier charges the vendor, resulting in a profit.

Advantages of Dropshipping

  • No need to hold inventory hence less capital outlay needed
  • Fulfillment of orders handled by suppliers
  • Diversification of products and/or suppliers
  • Relative Ease of Setting This Type of Business Up
  • Can be run from any location if its exclusively online

Disadvantages of Dropshipping

  • Supplier could be out of stock
  • Fees for dropshipping can eat into profit margins
  • Shipping costs are controlled by supplier
  • Dropshipper must handle returns unless other arrangements are made with supplier
  • Some suppliers will not white​ label the shipping labels (to be explained)
  • Customer orders several products in one order and they are sourced by different suppliers, resulting in shipping charges for each supplier
  • Competition is fierce due to low barriers to entry​

What's Your Verdict?

Based on the advantages and disadvantages it seems like it could go either way. If you look at the advantages you could get started very quickly and be up and running in practically no time.

The disadvantages are something that really need to be considered however. You can't take this lightly because the profit margins on this type of business model are tight. Any adverse situation will squeeze them further.​

Preliminary Considerations

There is some housekeeping that needs to take place before you start listing your products. You will encounter problems with your dropshipping business if you ignore these! Click on the arrows for more details for each item:

Ask Supplier for Price List

Make Sure You Are Crystal Clear on Shipping Fees and Handling Charges

Understand the Supplier's Return Policies

Make Sure Your Profit Margins Actually Allow For Profit

Stay Away From The Hottest Selling Categories

Factor in Other Costs

Overview of Process Flow

The following is an overview of how the sales process works in a dropshipping transaction (click on each arrow to find out more information bout each item):​

List The Product for a Price Higher Than The Supplier Gives

Buyer Purchases Item

Purchase Item from Supplier and Have Them Ship to Customer

Make Sure Your Customer Service is Impeccable

Other Considerations

When you make sales online, there are certain conditions that can require you to charge sales tax on your purchases. It used to be that sales online were pure and you didn't have to charge taxes on sales. That is still true in many instances but is getting much more fuzzy. Governments all over the world are looking for loopholes that can give them an excuse for them to get online retailers to charge tax. It stinks but it is a consideration.​ Whoever deals with the customer direct, is the one responsible for charging tax. That is usually the dropshipping entity.

Another factor is any kind of state licensing that could be required. Some products require special provisions in order to be sold. Also, along the lines of sales tax, you may need to obtain a sales certificate from your state specifying that you are exempt from being charged sales tax from your supplier. Many supplier may require this and won't do business with you if you don't possess this certificate.

Disclaimer: The information in this report is for information p​urposes only and should not be misconstrued as giving any kind of legal, tax, or even business advice. Consult the proper professionals to get the appropriate advise for your business.

Hi, my name is Jim. I am here to help you learn how to create your own online business. Never before has it been as easy as it is to do so. I will give you access to the necessary training to make it all happen. Just follow the training and perform the tasks as the come up and at the end of the training you will have a fully working framework with which to start earning money from your online business.

Click Here to Leave a Comment Below 0 comments

Leave a Reply: