How Drop Shipping Works
The drop shipping process is a very easy concept, which is one of the reasons that it has become so popular. The reputable formula is the very reason that it is so profitable. It is an easy process that can be duplicated and done time and time again to bring in revenue on a consistent basis.
When stripped to its simplest form, the drop shipping process breaks down into four steps:
- You, the drop shipper, find wholesale items and list them for sale on eBay or your own online store.
- The product sells, and payment is received.
- The drop shipper orders the product from his or her supplier and specifies that the item be shipped to the buyer.
- The difference between the sale price and the wholesale price is the drop shipper’s profit.
You may notice a peculiar thing about this process: the item is sold before it is ever ordered. Therefore, you collect payment before you place the order of the item. In this way, you never have to use your own money. This is one of the benefits of drop shipping. Because of this fact, it is very easy for someone to get started without putting down any money.
You’ll also notice that the product is shipped directly to the customer. When someone purchases an item that you drop ship, you simply arrange for the item to go to the buyer. When doing this, you never have to handle the item. Because the item goes directly from the supplier to the purchaser, they handle the packaging, they handle the shipping, and they handle the delivery. You never see, store, or touch the items, and because the customer pays you before you order, you never have to pay with your own money.
Therefore, once you find an item from a wholesale supplier, you can sell it over and over and profit the difference between the wholesale price and the selling price. This can range from a few dollars to hundreds of dollars per item. How you collect your profits is another question that is raised, and it is addressed in Part 3.