Looking for a great home based startup idea to provide a secondary income (or primary, if it goes well)? Combine an eCommerce website with drop shipping facilities to lower costs and start earning from day one.
Drop shipping is a technique used by many home based and small business owners to fulfil orders and deliver products without having to handle warehousing, packaging and transport.
Instead, a drop shipping company takes care of this aspect of the business (often delivering directly from the factory), allowing you to focus on marketing and growing the store.
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This article shows why drop shipping is such a powerful tool to help eCommerce startups make money, and how to get started quickly and easily.
How drop shipping works
Drop shipping is a simple process:
- Create a relationship with a drop shipper
- Sell products online
- Transfer orders to the drop shipper
- Drop shipper fulfills the order
- Repeat steps 2 - 4
Advantages of drop shipping
Drop shipping is a fantastic technique to use to launch a new business because it requires very little capital outlay.
Traditional businesses need to buy and store stock before it can be sold. This is a great expense - especially for small or home business startups.
Drop shipping avoids this problem entirely by allowing merchants to accept payment from their eCommerce store before placing an order with the drop shipping service and paying for it.
This means that instead of working off a deficit, eCommerce stores that use drop shippers only ever pay for stock that has already been sold.
In addition, drop shippers can fulfill orders far more cost effectively than an individual startup because they have warehouse, transport, packaging and delivery infrastructure and processes in place already.
Drop shipping serves to lower the cost of fulfilling orders, which leaves a greater share of the profit in your hands.
Disadvantages of drop shipping
Any time your business has to rely on a third party service, you are at the mercy of their performance. It is important to ensure that you only work with trusted and reputable drop shipping services because:
- suppliers of poor quality products can harm your business reputation
- unreliable distributors can lead to delays, leaving customers dissatisfied
How to start an online store
Starting an online store, and in particular, a drop shipping eCommerce store, requires vision backed by research and followed by persistent and consistent sales and marketing.
Fortunately, there are some great tools and services out there that will make your life a lot easier.
Unfortunately, these same tools also make it easier for the competition to get started. This is why it is so important to come up with a great idea and/or brand, and research it properly before approaching a drop shipper and building a store.
Idea & brand
Before you can begin selling stuff online it is important to understand your target market, why you will be differentiated from the competition, and what will make people buy from you. These are not necessarily trivial questions, and a lot of work must go into building a great business plan.
An idea is only worthwhile if you are passionate about it, and are confident that it has the potential to make money.
Read How to start a business for an in-depth look at creating a new business.
Select a drop shipper
There are a few well-established, high quality drop-shipping services that you can combine with one of the world's best shopping cart software products or online eCommerce website builders.
now offers comprehensive facilities to help manage and streamline a dropshipping eCommerce store.
Decide on the best one for you based on which one has the service terms, and the products and brands you need. WorldWideBrands is one of the biggest and best.
It's worthwhile to note that it is possible to use WorldWideBrands as a warehousing and distribution agent that stores and manages your own inventory. This has the advantage that you control stock, so it is less likely that new orders will be placed on back-order leading to delays. This also makes it possible to get bulk order or wholesale discounts.
Arguably, the new leader in eCommerce shipping is Shipstation, which automates and consolidates shipping (via any major delivery service) from over 40 different sales channels.
Shipstation's automation features mean that shipping mistakes are drastically reduced and you can quickly and easily monitor the state of your deliveries on a slick, online interface. The net effect is that you have more time to put into growing the business by adding more sales channels (since they're easier to manage with Shipstation).
Build an eCommerce website
Building an eCommerce store is easy with today's top shopping cart software and eCommerce website builders. While some drop shipping services also offer a website building facility, I recommend that you use an independent eCommerce website builder so that you:
- are not tied to one distributor
- enjoy greater speed, power, flexibility, and SEO
- have greater control
Check out our list of the top eCommerce website builders at Which Web platform has the best SEO?. Many of the hosted eCommerce site builders mentioned in that list offer a free trial, and serious packages to suit businesses of all sizes, so shop around til you find the one that is perfect for you.
Do you use drop shipping as part of the supply chain? Has drop shipping helped drive growth in the startup phase? What problems have you experienced with drop shippers? Share your drop shipping and eCommerce tips, advice and experiences in the comments or join me on Twitter, LinkedIn and Google+ to continue the conversation.