Dropshipping: is everything as good as it seems?

Dropshipping is a simple marketing concept, a wholesaler or manufacturer allows you to offer your products for sale on your website or through online auctions like eBay. The advantage to 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 his customer on his 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 somewhere to store your products. Shipping can be a time-consuming and expensive operation, but with dropshipping, your supplier will take care of all of this.

At first glance, this sounds almost like the perfect business for anyone starting out as an Internet marketer. However, before launching into dropshipping, the aspiring entrepreneur must take several factors into account. Although there are many companies that are ready 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 the products of other wholesalers and add a margin 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. Who is the competition and how much do they ask for the product in their listings. You can also see how successful they have been in selling the items by looking at their history. By doing this you will find out if there is a market and what price you might charge.

Over the years, eBay has raised their 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 consider 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 that are made about it. Do your research first and make sure that you can earn a reasonable return for the time and effort you put into the business.