How Does Drop Shipping Work?

A lot of people use this method to generate significant income streams online. Most people that make money on auction sites, sell things that they no longer need simply to get rid of them. Others go to garage sales buy things cheap, and sell them at a profit, another way is one that my husband is a big fan of, he buys something on the site really cheap. When he receives what ever item he purchased he takes pretty pictures of them and lists it again, at a higher margin. I'm not a big fan of this method but it is working for him. No you are probably wondering why I prefer drop shipping to my husbands method, truth is I don't use income streams that carry a risk unless the ROI is very high (which in my experience seeing this method being used is not high enough!). Then again it is working for some people so who am I to knock it, this is just my personal opinion.

I dare say that a lot of the eBay Power-sellers probably got to that stage from this particular business model. One of the reason some people stay away from ecommerce is the actual work involved to package, storage facilities, shipping even the obstacle of buying stock to sell let's face it not everyone have the funding to order a container full of goods from China.

If you use drop shipping as a business model you don't have to go through all those hassles. Drop Shippers make money by selling other people's products, they keep the difference (customers purchase amount-wholesale amount) as their profit. This is not a new phenomenon this method has been around for ages, some catalogue businesses and even some retails stores do this and have probably done so since my parents were young! The days of the Internet have made it easier for an average person to enjoy the benefits of this method, the Drop Shipping Company simply use this avenue to sell additional units of product that they are already selling.

It is an easy business model for a start out home-business as I found it one of the easiest income streams to understand for people with little knowledge of commerce, it doesn't require any start up money if you want to sign up with one of the networks it costs very little. It's not time consuming either and it can definitely provide a solid income stream for you.

So know this is the nuts and bolts of Drop Shipping;

Find a wholesale item to list on any auction site or if you have a website with an online store you can list it there->You receive payment WHEN the item is sold->You order the product from your supplier and specify to them, that the item is to be shipped to the buyer (you obviously need to get their details before you order)-> Now the difference between the retail prize and the wholesale prize is your profit.

One very important thing that I will stress, is to NEVER order until you have received payment from your buyer. Now another thing to think about is how you would like to be paid. If you do use the auction sites, your customer can pay what ever FOP you have stated in your auction. If you sell from your website, again is it up to you just remember that for credit card payments you will have merchant fee's to pay.