A drop ship arrangement is one in which you do the selling and someone else does the shipping. In theory, it’s an easy way to get started selling products online, but in reality it’s no cakewalk and I’ve seen many horror stories – including seller account loss on eBay and Amazon.
Especially if you are new to selling online, PLEASE heed this warning!
I haven’t heard a really good drop shipping success story (by someone NOT selling or endorsing a course about drop shipping) in years. If you are going to have success with a drop shipping arrangement it will almost certainly be the result of an exclusive arrangement that you seek out and secure on your own (not from a directory). For example, a good arrangement would be a local widget maker who allows you to represent them on eBay, and they agree to quickly ship whatever you sell, accept returns, and keep you up to date minute to minute on inventory levels.
When it comes to Amazon, if you are anything except a VERY seasoned Amazon selling pro with VERY strong ties to your sources (for example, you know the NAME of your contact and you talk almost DAILY and send each other birthday cards etc.), then DO NOT DROP SHIP ON AMAZON. Even if you meet all those qualifications…be VERY cautious. Drop shipping is an unforgiving minefield.
99.9% of the time the best course of action when selling online is to take possession of your inventory or make sure it’s in the hands of someone you TOTALLY trust at all times.
You MUST know your inventory levels as well. If your source runs out of inventory ONE TIME on an order placed by a customer on Amazon – you could lose your account. It’s simply not worth the risk.
You’ll find far better margins and stability elsewhere. Avoid drop shipping until you are very good at selling online and you’ve developed very structured and transparent relationships with exclusive sources. Done any other way, the drop ship model could bring your business down in a day at any point with a single miscalculation about inventory levels, a return, or a mislabeled box.
This is why I love the FBA (fulfillment by Amazon) model where your inventory resides safely at an Amazon warehouse and Amazon stops selling your items when inventory hits zero. FBA has all the benefits of drop shipping because you send all your inventory to Amazon and THEY do the shipping. As long as your profit margin is big enough, this is a fantastic arrangement. Learn more at ProvenAmazonCourse.com
Especially if you are a newbie, please don’t fall for the “easy sell” pitch of drop shipping as a viable place to start your online business. It’s a minefield and entirely violates Amazon policy the way most people are doing it.