Working from home is the ultimate dream for some but finding opportunities to do so can be a problem. One internet-based home business idea is to build a drop shipping website. A home drop shipping business is a bit like running a shop without the hassle of keeping it stocked and can provide an excellent opportunity for those with business acumen in the right niche. There are many different drop shipping wholesalers around, stocking a variety of products – jewelry, books, DVDs, clothing – so there is no shortage of opportunities.
What is Drop Shipping?
Drop shipping is a technique used by many internet businesses, which sell items over the internet but don't keep the items in stock. When an order comes in for an item they send the order on to a wholesaler or manufacturer, which then sends the order directly to the customer who has placed the order.
In a way, eBay could be considered a drop shipping enterprise. They don’t actually stock the goods they advertise and neither are they responsible for dispatch. All they really provide is the ‘shop window’ – the website.
How to Make Money from Drop Shipping
As a work from home entrepreneur, drop shipping provides the opportunity to make money by owning a drop ship retail website. This is like a virtual store but without the initial start-up costs of high street retailer. Hosting fees are miniscule in comparison to the rent on a building and there’s no need to hire staff or buy stock in advance, for example.
Drop ship websites advertise products produced by other people and make money the same way that a retailer does – by taking a small percentage off the top of anything they sell.
Drop Shipping Risks
Because drop shipping involves a positive cash flow cycle - that is, money is taken from the buyer before the stock itself is ordered and packed - the financial risks involved are minimal.
However, there are a number of drop shipping scams advertised on the internet as ‘get rich quick’ schemes. These are schemes in which the scammer will set the victim up with a drop ship site and offer to add the victim to their 'catalogue' of retailers in return for a fee. However, many of these supposed retailers are in fact middle men who charge a cut of their own and can leave little margin for profit.
There are also operational risks, such as back ordering, where the retailer takes an order for a product which has sold out. In this instance the retailer must refund any money taken or face a delay in delivery - both of which can reflect badly on the retailer and result in a loss of business. A good drop shipping business should make every effort to keep on top of stock availability.
How to Start Drop Shipping
The first step is to decide what the business is going to sell. Having a clear idea of the intended business area can help a prospective business owner to avoid scams – scam artists will often target broad drop ship searches and searching a niche market is usually easier and less perilous.
Once that decision has been made, find a drop ship supplier. There are many online directories of suppliers – though as already mentioned, be a careful when searching. Don’t part with any money if there are any doubts and try and check online reviews and feedback before doing business with a company.
Finally, build a website. This is the shop front where goods are advertised and orders received. That’s all there is to it!
Drop shipping provides a legitimate and potentially lucrative work from home possibility for those with the right business mind. There is little financial outlay at the beginning and as such little risk. There are a number of scam artists ready to prey on the unready but there are many other legitimate companies offering genuine opportunities. Drop shipping can be the ideal work from home business opportunity for some.
