Want to know what drop shipping is?? Let's take a quick view of item distribution first.

Okay, pretend Saturn Computer Mfg. makes a product called Saturn’s Titanium Processor.  This processor of Saturn is very popular amongst the computer industry and it will undoubtedly speed up the performance of any home computer immensely.

Saturn Computer Mfg. builds the titanium processor, but they don’t publicly sell it to people.  They are basically a manufacturer that makes computer components.  There is no way that they could publicly sell their products while spending loads of time making great products like their processor.  So, they distribution of their product; basically they need companies that will take their Titanium Processor and distribute it to places (stores) that will sell them.

For a long time, Saturn Computer Mfg. has sold their Titanium Processor to JimBob’s Distribution.  JimBob Distribution buys Saturn’s titanium processors by the truckload.  They are Saturn’s number one distributor.  JimBob Distribution pays $75.00 per processor, which is a great price for the product.  That price is essentially called “The Manufacturer Wholesale Price.”

However, JimBob Distribution doesn’t sell this processor to the overall public either.  They’re called a Distributor.  Jim Bob Distribution distributes Saturn’s Titanium Processor.

So, what happens now??

JimBob Distribution contracts with a number of retail stores, particularly a chain called JoJo’s Electronics World.  JoJo’s originated from a retail entrepreneur who saw a great vision and the huge potential of computer processors.  Currently, there is a JoJo’s Electronic World on every street in every major city in the United States.  JoJo’s Electronics World buys huge cases of Saturn’s Titanium processor from JimBob’s Distribution for 125.00 a processor.  So, JimBob Distribution makes $50.00 on every Titanium Processor they sell to JoJo’s Electronics World’s Retail Stores.  ($125.00 - $75.00 = $50.00)

JimBob Distribution is very, very happy about this, basically because JoJo’s Electronic World buys lots and lots of Saturn Titanium Processors.

Boxes upon boxes of Saturn Titanium Processors show up in the inventory rooms of JoJo’s Electronics’ World everyday.  JoJo’s employees open up these cases, and take out 20 processors out of each box.  With their price guns, the employees of JoJo’s stick a $190.00 price on each Saturn Titanium Processor.  So, JoJo’s makes a total of $65.00 on each processor sold in their retail store.  ($190.00 -How much they sold the processor minus – what they paid for the processor $125.00 = $65.00).

So, JoJo’s Electronics World is even happier then JimBob Distribution.

The people that buy the processors from JoJo’s Electronics World are also very happy.  They own a great, top-of-the-line processor, and think they have paid a great price for it.  So, everyone’s just happy, happiness everywhere.

That’s product distribution in a nutshell. The manufacturer wants someone to sell their products, so they sell to a distributor, that distributor then sells to a retailer, and that retailer then sells to a consumer (the end user).   The Manufacturer, the Distributor, and the consumer are all happy because the end user is willing pay the price for the product. Drop Shipping has been in existence for a while too.

So, we’ve already talked about the manufacturer, distributor, and the retailer relationship. When you employ drop shipping to sell products and things on the Internet, (or maybe somewhere else), YOU become the ultimate RETAILER.

For descriptive purposes, there are two types of retailers. There is a retailer who physically stocks products in their inventory, and there is a stockless retailer. Drop Shipping means that you are essentially a stockless retailer.

Retailers that Physically Stock Inventory

Let’s say you want to open your retail store online.  Let’s also say you are hell bent on stocking your own physical products.  Here, you’re either going to have to own a huge, luxurious and spacious garage or you’re going to have to rent a warehouse.  Plus, you’ll have to setup a Fedex, DHL, or UPS shipping account in order for them to ship out your products for you.  That’s of course if you want to do all of this yourself: stock, package, market, finances, and business management.  You know what the worst part about this is??  You’re going to have to pay thousands of dollars up front to stock any products in your physical store.

Money, Mulah, you’re going to need a bunch of it to start an online, physical retail store this way.  I bet you didn’t come here to find out how to do that.  For example, let’s say you want to stock GPS radios or Infrared Radar Detectors, what company would you contact for this??  Hmmm, Whistler, Escort are some brand names that come to mind.  Go ahead and call up one of those companies and ask them what their minimum order is to setup a wholesale, retail account.  I could be wrong, but I’m guessing around $80,000.00 and up.  That’s eighty grand everyone.   I don’t know anyone that physically stocks radar detectors and sells them outside of Wal-Mart or Academy Sports.  I sure won’t.

Physically stocking products costs some dough, there’s no way around it really.  Basically, you have to put up towering amounts of money at first and pray that people will buy those products from you (sitting in your garage). 

 Okay, the much, much better method……. (Drop Shipping)

Inventory-less Retailing (Drop Shipping)

So we’re finally getting to the point of your reading of this instruction.  Basically, when it comes to drop shipping, a company ships out products for you one-by-one to the customers you sell the products to.

Here’s Drop Shipping 101:

1) You establish an online presence, either by your own Online Store or through a portal like EBay or Yahoo, but you have to be able to accept debit or credit cards.

2) Find a distributor, a drop shipper that will drop ship products to customers you sell to.  The best place in the world to find dropshippers is www.WorldwideBrands.com.  This is a site that pretty much scours the country in search of any and all drop shippers that will dropship products one-by-one to people for online retailers.

3) Once you find a dropshipper, you have to signup for a retailer account with that distributor.

4) Your distributor gives you access to their products, specifically they’ll let you use their product descriptions and pictures in order to sell their products.  You in turn post this exact information in your online store.

5) Someone is browsing around in your store; all of a sudden they click the “Buy It Now” icon and purchase a leather jacket from you for $185.00.  Your site then automatically charges them a shipping fee, let’s say $15.00.

6) You’ve made a sale.  So now you email your dropshipper with your customer’s information, their name and shipping address.

7) That leather jacket is sent directly to your customer’s door with YOUR site’s name or store name on the packaging.

8) The dropshipper then invoices you a wholesale price of $125.00 for that leather jacket, plus the shipping.

9.) Your customer then is very happy, they have a new leather jacket from what they see as, a reliable online store and tell their family and many friends about their experience.

Boom!!  $60.00 in profits from one item.  What did you do?? You sent ONE email.  No warehousing, no stocking your dirty garage praying that you would sell your entire inventory.  Crazy don’t you think??  Honestly, people still don’t believe me when I tell them that I do this.

Easy money a child could make.  However, remember that in order for this to work, you need to work with only RELIABLE, good distributors that will do drop shipping.  That’s why I recommend www.WorldwideBrands.com.

 

Drop Shipping  - Drop Shipping 101
DropshipMan