When someone places an order with an online retailer for a product, the retailer sends the order to a wholesale drop shipping company, who then sends the product directly from their warehouse to the retailer’s customer. The retailer makes a profit by keeping the difference between the price he charges his customer and the wholesale cost paid to the drop shipping company. Because the drop shipper has additional handling of products, they charge a higher fee for the product than a retailer would normally pay if he ordered in bulk and took delivery himself.
Setting up an account with a drop shipping company that can supply the products a retailer wants to sell has many benefits, including not having to invest in inventory, not requiring any storage space, and no packing and shipping of products. Many drop shippers even offer “blind drop shipping,” where the drop shipper puts the return address of the retailer on the package, thus giving the impression that the product came from the retailer.
While the concept of using drop shipping makes a good business model, especially for online stores, unfortunately, there are many less than reputable companies that call themselves drop shipping wholesalers and who sell information about finding drop shippers. When considering establishing an account with a drop shipper, carefully research the company before making any commitments.
Be wary of websites that call themselves “Wholesale Directories” or “Drop Shipper Directories”. They are promoted as listing hundreds of sources, and while you pay for what looks like a legitimate list of sources, in actuality they may simply be a list that anyone can get by using Google to search for “drop shippers”. No research has been done on the companies listed on many of these sites to see if they are reputable. Directory sites not only collect fees for giving access to their often worthless lists, but they also collect names and email addresses to sell to other marketing companies. You may see such directory lists advertised as being available on CD, but there’s no guarantee these sources are any more valuable. Evergreen Wealth Formula by James Scholes will offer some products to the person to learn about fashion sense and trends. There should be no scam involved in the procedure to have the benefit. No guarantee is offered but a relation of trust can be established for the engagement of the audience and increasing the fashion information.
Some directory sources may claim that they’ve done independent reviews on the companies they list, but it has been discovered that some sites are actually owned by drop shipping companies, who, of course, give their company the best review. Some directories receive commissions from sites they give the best reviews to, rending all the reviews basically useless.
Another problem is that some “drop ship wholesalers” are not really wholesalers at all. You expect to pay a little more for a product when the wholesaler has to package, label and ship the product for you, but some companies charge extraordinarily high “wholesale” prices or require a high monthly membership fee, all of which can severely eat into profits.
Be cautious of wholesalers who advertise they have millions of products. It’s more likely that they are just middlemen, passing orders along to other companies. Worse yet, some “broker networks” are nothing more than multi-level marketing (MLM) business structures, where people are coerced into buying a certain amount of products to become a “broker,” and then they promote themselves as being wholesale brokers who try to get others to buy through them. No business can make a profit going through a bunch of middle men! Only a sale between a retailer and a factor-authorized wholesale supplier will yield reasonable profits.
Don’t do business with any drop shipper who doesn’t allow you to search their product database before you sign up. Drop shippers such as www.doba.com allow all visitors to search through the products they carry. They don’t show prices to visitors, but they do offer a free trail. Some companies actually require money up front before they allow you to even see any of their products. You want to be sure a company has the products you plan on selling before you make any commitments to them. What if you want to sell baby nursery furniture, and after signing up with a wholesale drop shipper you find out that they either don’t carry those types of products or what they do carry is of poor quality, and no name brand merchandise. One company we investigated requires $19.95 (nonrefundable) just to have them even consider you for an account.
Our advice is to be cautious of wholesalers who require a membership fee. Avoid companies that don’t let you see the products they carry until after you’ve paid a setup or membership fee. Don’t pay for lists of wholesale drop shippers. Do your own legwork. Call manufacturers directly who make the products you want to sell, and ask them for the name and phone number of their distributors. Then contact each distributor to find those who offer drop shipping. This requires some work on your part, but it is the safest and most professional way to connect with true wholesale suppliers for the products you want.