Best Practices For Online Retailers That Drop Ship
Drop shipping is a great way to help the online retailer reduce costs both in time and money and more efficiently ship product
. You can maximize the power of drop shipping by embracing the following three drop shipping best practices of choosing your drop shipper wisely, focusing on margins as a dollar amount, and researching products carefully.
In the following sections, I explain each of these practices in greater detail.
Choose the Best Drop Shipper
With drop shipping you lose some control over inventory and shipping. To minimize the risk of being unable to fill a customer's order, choose a drop shipper who offers the following:
- Quick shipping
- Large inventory of in-stock items
Focusing on Profit Margins in Dollars
To cover shipping and handling costs, a wholesale supplier has to charge you more for each item it drop ships than for items you buy in bulk. You can still find drop-ship items that garner up to 100% profit margins, but high-percentage margins are in short supply on drop-ship items.
The key to boosting your profits is to focus on margins as a dollar amount rather than as a percentage.
If I sell an item that costs me $10, for instance, and I sell it for $20, my profit margin is 100%, but I've made only $10 on it. If I sell an item that costs me $500 for $550, however, my profit margin is a measly 10%, but I've just made $50 -- five times more than I did on the item with the 100% margin!
With drop shipping, selling a high-priced item carries no more risk than selling a low-priced item.
Researching for Potentially Profitable Products
How do you choose products with the highest potential for profit? I use the following criteria:
- If your drop ship supplier provides an exportable data file, sort the data using spreadsheet software to show items with the highest profit margins (by comparing cost against MSRP).
- Compare your cost to the price of items sold on highly competitive sites such as Amazon.com or eBay. On eBay, be sure you're looking at ended items, and not currently running ones.
- Compare your cost against items listed on comparison shopping sites such as Shopping.com, PriceGrabber.com, Google Products, Shopzilla, and others.
- Many shopping comparison sites will have a "hot list" -- items that are the most popular. Look for these items and compare your cost against the typical retail price.
This list is not comprehensive, but gives you a good place to get started. With time, you'll learn new and unique methods of researching products.
By implementing these three simple drop-ship strategies -- choose the right drop shipper, focus on profit margins as dollar amounts, and research products carefully -- you can maximize the power of drop shipping, minimize your risks, and boost your bottom line.
by: Stu Wiseman
OS ERROS ESTRATÉGICOS DA CAMPANHA DE JOSÉ SERRA Developing A Successful Trading System Debt Control Strategic Money Control Leads to Much better Handling Of Credit card debt Trading Room -pt1 Trading Room -pt2 Real-time Investigation as the Trading Advantage Becoming A Strategic Accounting Manager Know of the A variety of Trading Pins How Price Label Guns May Help Retailers Not To Lose Sale Getting Know Your Biases in Trading Several types of Trading Pins Trading Price Action VS. Indicators (Round 1) Retailers Offer Free Laptop With Mobile Phones To Sustain In Market