Dropshipping: is it all as good as it seems?

Dropshipping is a simple marketing concept, a wholesaler or manufacturer allows you to offer your products for sale on their website or through online auctions such as eBay. The advantage for you as a seller is that you do not have to pay for the item until the sale is made and you have been paid. In addition, the supplier will ship the products to your customer on your behalf.

The advantages seem obvious, especially if you are just starting your new business. There is no need to spend money buying your initial stock nor do you have to find anywhere to store your products. Shipping can be an expensive and time-consuming operation, but with dropshipping, your supplier will take care of all of this.

At first glance, this almost sounds like the perfect business for anyone just starting out as an internet marketer. However, before launching into dropshipping, the aspiring entrepreneur must take into account several factors. Although there are many companies that are prepared to offer dropshipping services, not all of them are as good as the others. Some so-called dropshippers are little more than middlemen who buy other wholesalers’ products and add a markup and then pass them off as dropshipping items. The price they charge is often very little less than what they sell for on auction sites. Your chances of making any profit with such companies are quite low.

The first test when looking for a suitable dropshipping company is to look at the products they offer and then check them out on eBay. What is the competition and how much are they asking for the product in their listings. You can also see how successful your items have been in selling by looking at their history. By doing this you will find out if there is a market and what price you could charge.

Over the years, eBay has raised its fees considerably, and after calculating the gross profit you’re likely to make, you now need to calculate the selling costs you’ll incur. There will be a listing fee plus a final sale fee and PayPal charges to calculate. Once you’ve figured this out, you’ll be able to figure out what profit per sale you could expect. It’s also worth remembering that many sellers feel they’re doing well if they sell 50% of the items they list, so you should also factor the listing cost of unsold items into your calculations.

Dropshipping can be a useful tool, especially when you’re just starting out as an internet marketer, but don’t be put off by some of the claims made about it. Do your research first and make sure you can make a reasonable profit for the time and effort you put into the business.