Drop shipping has grown rapidly in the UK as a way of starting a business without a massive expenditure on stock, storage and marketing. In the last couple of years, eBay traders are increasingly shipping goods from China, India and other countries with low manufacturing costs to customers in the UK and beyond. It is one way that someone can make a living with zero cost to get off the ground.
What is Drop Shipping
Drop shipping is simply advertising a retailer or distributor’s goods for slightly more than you can source them, taking the payment from your customer and placing the order with your supplier (retailer/distributor). The supplier then ships the product to your customer, but does not include any paperwork that would suggest the order did not originate from you or your business. Some good drop-shippers will even place your company or private name on paperwork to ensure the customer returns to you when they want to order again.
The idea is nothing new because for years, shop owners have told customers that certain parts or products would need to be ordered from suppliers. Drop-shippers are acting as the middle-man, which is what all good entrepreneurs do. They are providing a service by sourcing the products for customers and sourcing the customers for suppliers.
How you Start Drop Shipping
The easiest way to start a drop-shipping business is to start an eBay store. You can list items for sale and you only pay eBay once per month when you have already made your sale. Before you dive in the deep end, you need to find a good source. While many drop-shippers are good, you will always have one or two that do not deliver on time or do not deliver at all. This is obviously bad for your reputation and a trader sinks or swims based on their reputation especially somewhere like eBay.
Some Test Sales
If you can, test the service out for yourself, order something and go through the returns process so you know you will not lose money if things go wrong. You also get to know how long things take to arrive, how the products are packaged and if there are any duty charges when the product arrives in customs. Many suppliers from China will label goods as gifts so that customs do not attach a charge, but this can be risky despite the fact that you have not packaged the goods. If customs inspect these packages, your customers could be charged import duty on the products when they take delivery.
Sadly, many counterfeit goods arrive from overseas and this can lead to more serious problems than simple charges for import duty. It is common for customs to inspect packages labelled as clothes or electronic goods. Some electronics from overseas do not meet the safety regulations required in the UK and Europe and this can land you in hot water. The rule of thumb is to reject anything you are not completely sure is authentic and if you have any doubts about the safety, you are better off leaving them off your stock list.
Can I Make a Profit
Definitely is the short answer. While there are some precautions that need to be observed, drop-shipping has grown quickly because people are making a lot of money this way. Do some research, find what people want, need or desire and try to find a supplier that leaves a good margin and you will have a success on your hands. Don’t think it is going to be easy, because to do things properly, you need to keep your books in order in the same way as any other business does, but doing so can pay huge dividends.
Aki Hashimoto is a blogger who loves buying and selling over the Internet. She recommends that whether you are buying or selling online, it is important to use a good courier service and apply for van courier insurance before you send your goods.