Using drop ship distributors provides the online business owner with a flexible solution for sourcing products. Drop shipping is the term used for a retail business that does not keep its products in stock. Instead, the business transfers the customer orders and shipment information to a distributor, wholesaler or even the manufacturer
itself. These drop ship distributors then ship the ordered products directly to the customer.
The drop shipping technique is very popular for both small businesses and online retailers. Many customers will never know that their purchase came from drop ship distributors instead of from the retailers through which they placed their order.
How Online Retailers Can Use Drop Shipping
If you are starting an online retail business, then drop shipping can be a great way to lower your inventory costs and effectively increase your profit margins. In fact, drop shipping means having zero inventory costs because you will not have to hold any of the inventory. Traditional retail models mean investing your money in inventory in the hopes that someone will purchase it. The longer it takes for an item to move, the longer you have to wait to recoup the money that you have put into it. Drop shipping means that you can skip this often expensive step.
Drop shipping also means that instead of having to pay for a storage space to hold your inventory, your drop ship distributors store the entire inventory instead. When you send the order to the drop shipper, the product is then shipped directly to the customer (unless you have arranged otherwise).
Major Networks Of Drop Ship Distributors
There are several different drop ship distributors, each of which has its own advantages and disadvantages for you as the online retailer. Based on the types of products you sell, the type of drop ship distributors you use will vary. Contrary to some snake-oil claims, drop shipping will not make you rich overnight and isn’t a guarantee for sure-fire wealth. Having said, that, drop ship networks can be a tremendous asset for online retailers – both large and small.
A few years ago, it was the responsibility of the retailer to seek out wholesalers who would be willing to drop ship products. This often required a great deal of time to find and correspond with potential wholesale or manufacturing partners. Today, there are companies that specialize in helping you locate drop ship distributors much more quickly. We review three of our favorites below…
Worldwide Brands is one of the largest drop ship distributor database companies, boasting credentials that include Better Business Bureau ratings as well as certifications from eBay. This company also is a featured speaker at eBay’s annual Live National convention.
Worldwide Brands provides information on thousands of different wholesale suppliers willing to work with home based business owners, which is how most internet retail businesses begin. Worldwide Brands also offers research on different products to help you to determine which products are most appropriate for you to sell through your online business. Their database of wholesalers currently includes more than 8,000 different drop ship distributors and information on their products to save you time while deciding what to sell on your website.
Visit their website for educational videos that aim to help you understand how to take advantage of the different features of drop shipping.
Doba simplifies drop shipping by serving as a consolidated wholesaler for drop ship distributors. They claim to have more than 1.5 million different products that are sourced from over 300 different drop ship distributors and manufacturers that guarantee the low prices that you pay. Low prices for inventory mean maximized profits for you as the online retailer.
As of this writing, Doba offers a free 7-day trial to see how you like working with their large database of wholesale suppliers and manufacturers. As a small business owner, you’re not likely to provide order volume
to a wholesaler at the scale that will result in volume pricing. However, because you are sourcing products through Doba (along with many other online retailers) you are often able to take advantage of lower product prices.
Inventory Source connects online retailers to manufacturers and wholesalers for a wide variety of products. Top brands, like Versace, Intel, and Nintendo, are available though Inventory Source. In addition to providing a large catalog of different products for you to choose from, Inventory Source also provides data feeds that you can load into your online store.
The data feeds are updated with changes in product availability, price, and inventory stock quantity.
Inventory Source’s database of in-stock products numbers more than 500,000. All of these products are available for drop shipping. The company is also well versed in loading product information quickly into a variety of different shopping cart platforms.
If you have not yet decided upon which platform you want to use to sell products online, or need a new website, Inventory Source offers what they call a “Hosted Service Solution.” This provides you with both free website hosting as well as their shopping cart. Despite using Inventory Source’s platform and shopping cart to automate your online retail business, both the selection of products as well as the mark-ups that you earn when you sell them, are left up to you as the online retail business owner.
Considerations Before Using Drop Ship Distributors
While drop ship distributors help small online business owners offer more products than they could traditionally afford to stock themselves, there can be some challenges. For example, if you have a website that sells both your own products as well as those sourced through drop ship networks, if your customer places an order that includes one of your products and two drop-ship products, they will likely receive their order in three different shipments. At times this can cause confusion with the customer and a potential loss of goodwill.
It’s important to understand how drop ship distributors fit into your overall business model. Some online businesses can entirely outsource their inventory while others can do so only partially. As a business owner, it’s up to you to understand the pros and cons and make the best decision for your online business operations.