Animated Marketing

Finding A Drop Shipper

January 7, 2010

I’m going to dive right into this subject and tell you what to think about when looking for a drop ship distributor.

For starters, there are a ton of people who want to make money online. The problem has been that there are so many people running scams online, that it makes it almost impossible for the novice entrepreneur to get started.

I, myself, have tried several different ways to make money online. But the one thing that I can tell you is this. Selling products may not be the easiest way out there, but it is the most ‘sound’ method that I have found.

So that’s where the drop ship distributor comes in. You want to make money online selling products. So you’ve basically got 3 choices:

1. Build or manufacture your own product to sell
2. Stock or warehouse an inventory of products to sell
3. Drop ship your products direct from the distributor

Option 1 is really a great option if you are handy or can make something that people would want to buy. Doing this would give you a huge edge, since the competition would not have access to your product. You would also have phenomenal profit margins.

Option 2 would be really good if you have a sizeable amount of money to invest upfront. The margins here would actually be pretty good as well. The big downside here is that if your products don’t sell as well as you thought they would, you are going to be out some money. This is basically the risk that a Brick-and-mortar business takes. You would need to do a good feasibility study to make sure you are making a good investment.

Option 3 has a bit lower profit margins and lots of competition than option 2. Drop shipping products tends to draw a ton of newbie webmasters who want to try their hand online to a low upfront-cost business. This option definitely has the least risk, and is my personal favorite.

So where do you go about finding a drop ship distributor? There are several ‘lists’ online and drop ship companies who want you to sell their products.

One legitimate source that I have used (and have a lifetime membership to) is a company called Worldwide Brands. Also known as the Drop Ship Source Directory, they can be found at www.mydssd.com. Chris Malta is the founder of Worldwide Brands and has really put together a nice directory over the years. When you buy a membership to their directory, you get instant member-only access to thousands of Dropshippers and wholesalers.

He has it laid out so that you can search for products several different ways. I usually use the keyword search tool. There, you enter a product and click search. You get a list of all suppliers that drop ship or wholesale this product. Each supplier page has contact information and website url.

What I would strongly advise against is using some all-in-one drop ship supplier that carries toothbrushes, swords, shoulder massagers and ceramic horses. These companies, like SMC, do not specialize in any one product line. Therefore, how do they know what products actually sell? It is best to find a drop ship distributor who specializes in the product, so that they will only carry items that they know you can sell.

Another way to find a drop shipper is just ask. I have found several drop shippers by contacting the manufacturer and asking if they drop ship. Amazingly, some of them do.

Before deciding on a product to sell, be sure and research which drop ship companies are available for this type of product. This is the important warning. Do not…I repeat DO NOT use a drop shipper if they are selling their own products on a retail site below MSRP, discounted or with Free shipping promotions. In other words, many distributors have a retail store front with MSRP pricing. That is not a problem.

But more and more, I am finding that today’s distributors are selling their own products below their list price in addition to offering free shipping for orders over $50. You cannot compete with the distributor when they are doing this. So do not try!

Other things to consider when researching drop shipping distributors:

1. Be sure and find out if the distributor has a Drop ship fee or handling fee, that would be in addition to the normal shipping cost. This could seriously cut into lower price product margins.

2. The cost of shipping has gone up quite a bit over the last few years. But I have had a distributor that was a good bit inflated over my own real-time shipping costs. There is no good reason for a distributor to mark up the shipping cost to the retailer.

3. Get a wholesale price list before you even spend all the time building your website, if possible. That way you can find out what your margins will be. Be sure and compare their MSRP prices to the actual prices that other retailers are selling these products for. Even though you don’t want to be the lowest price guy out there, you will likely not be right at MSRP. This will give you a better gauge of what your real margins are.

4. Order a product or two and see how the distributor handles order processing, shipping times, tracking #s, etc.

5. Some drop shippers will put your Business name on the return shipping label. Some will not. If this is important to you, make sure you know this. Drop ship a box to your neighbor and see how the packaging looks.

6. Be cautious about ‘middlemen’ claiming to be drop ship distributors. There are retailers out there that are claiming to be drop shippers. You should get an idea they are for real by their presentation, and if the profit margins are really low.

7. Make sure your drop ship distributor keeps a good inventory of their products. Your customers will be none too happy if you are frequently delaying shipments because your drop shipper has the items backordered.

8. And my biggest pet peeve. Any great Drop ship distributor knows that by finding good retailers, like you, to sell their products through many great websites online, they will make a lot of money, and be highly reputable in the long term. But those who are greedily competing with their own retailers are destined to doom, and they will take great potential retailers with them. Don’t fall for it!

Finding a drop shipper is not hard. The hard part is researching your product and ensuring that your next eCommerce web venture is going to be feasible and competitive.