Let us understand dropshipping for eBay and Amazon. Dropshipping is promoting something you don't own. This may sound illegal, but actually is not. Dropshippers are businesses that provide available products or merchandises which will be shipped directly to your customer once you purchase it from your dropshipping supplier. To further understand this business model, here's how the process of dropshipping works. First is to find a company, a wholesaler, or a provider which agrees to dropship. You then list their product/s for sale on ecommerce sites like eBay, Amazon or your own website without the need to buy it. When the item sells, you collect the selling cost and the delivery cost from your client after which you send the wholesale price plus the handling and shipping fee to your dropshipping supplier. Your provider then ships the item directly to your client. The difference between the retail and the wholesale dropshipped cost is your profit. Advantages and Drawbacks of Dropshipping on eBay and Amazon Just like any other business, there are advantages and drawbacks of dropshipping on eBay and Amazon. What are the advantages? One of the advantages of dropshipping is that it eliminates risk. If something does not sell, your only risk is the listing fee. This therefore eliminates tying up money in stock. Another advantage is the variety and quantity of items that you can list. Whenever you purchase goods to resell, you are limited in the quantity and kind of products you may sell by the amount of money or credit you have for you to be able to purchase the products. However, when you dropship, you can list as many goods as you can for sale since you don’t have to make a purchase before you could start selling them online. What are the drawbacks to eBay and Amazon dropshipping? You have insufficient control over your products. When you dropship, you are at the mercy of the shipper since they control the packing and shipping processes. Poor service from a drop shipper may negatively affect your customer satisfaction evaluations on eBay and Amazon. Moreover, if your drop shipping supplier does not warn you about their low stock level, you could sell a product that isn’t available and can't be delivered. This puts your eBay or Amazon store in a really bad position. Two Main Types of Dropshippers There are two main types of drop shippers that you have to know and fully understand. These are the Aggregators and Master Distributors. Let us look at each kind before you decide on which type of company you wish to work with. Master Distributors are the manufacturers or the authorized marketing arm of the manufacturer. They hold the actual stocks and keeps inventory of them. While the Aggregators are the middlemen who earns a profit from percentaging. Dropshipping Aggregators, Aggregators, also known as Dropship Warehouse Companies, are essentially the middlemen. They advertise heavily online claiming to have millions of brand name goods which you can sell online. A lot of them also offer pre-made websites loaded with these products. These firms list products in a virtual warehouse which other, real wholesale companies or Master Distributors, have in stock. Aggregators do not really stock any products. Their inventory is really virtual. If you sign up with one of these aggregators, you'll learn that all of the goods that they offer is already promoting on eBay or Amazon for about the same cost they're offering it to you. When you order something from them, they order it from the real wholesaler, markup the cost and may charge you an additional fee. For this reason, it becomes very difficult to make any money as they've already made a big piece of your own profit.
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