How to Run a Dropship Business

A dropship business is one where a person, called a reseller, sells items online for a wholesaler. The reseller lists the items on a website and when orders come in, she forwards the shipping information to the wholesaler who sends the products to the buyers. The reseller does the work of building the website, advertising the products and accepting the payments. The difference between the retail and wholesale prices serve as income for the reseller. Resellers can run dropship businesses out of the reseller's home; there is no need to maintain an inventory of products or shipping materials.


Steps
1. Find a wholesaler who works with dropshippers. An Internet search will render a number of websites that list hundreds of wholesalers, and the wholesalers themselves have websites. It's not necessary to pay for a list of wholesalers if you're willing to do your own research.


2. Join the wholesaler's roster of dropshippers by supplying information about yourself and your business. The wholesaler will charge a monthly membership fee.


3. Set up a website with a shopping cart.

• Build your own website, and acquire a merchant account that allows you to accept credit cards. Find your own hosting service if you have the skills to do so and want a unique look. You will have to pay for your domain name and the hosting service.
• Sign up for a seller account on sites such as Amazon or eBay, which are designed to make setting up a dropshipping business easy. Both charge small fees when items are sold. If you choose to use a site such as Paypal to process payments, you will have to pay another fee.

4. Apply for a business license if your state or locality requires you to do so. You will have to pay taxes on your business income, but you will be able to deduct expenses and depreciation. Your income will be credited to you when determining how much Social Security you qualify for when you retire.


5. List the wholesaler's products on your site. Most make it easy to cut and paste photos and descriptions of their items. Price your items so you will make a profit when the items sell. It's usually best to use the wholesaler's suggested retail price.


6. Learn to drive traffic to your website by advertising on other websites, offering specials and sales, and using other marketing methods.


7. Verify that orders are paid for, then go to the wholesaler and buy the items ordered. Give the buyer's address information to the wholesaler.


8. Follow up with your buyers to make sure they are satisfied with the purchase. Address any concerns with the wholesaler, if necessary.


Tips

• If you want to start a dropship business but don't know much about computers or the Internet, there are companies that will offer a "turnkey" dropship business, along with training, for a price.
• Consider getting a toll-free number so buyers can contact you by phone if they have questions or are just unwilling to enter their credit card information on the website. You can get a toll-free number through a service that will forward the calls to your home phone and help you imitate the phone system of a larger company, including features such as on-hold music.
• Selling products person-to-person using catalogs is also a type of dropship business. Many people sell cosmetics, dietary supplements, food and thousands of other products by handing out catalogs or hosting "parties" for buyers.

Warnings

• Before deciding on a wholesaler to work with, check to see how many dropshippers already offer the same products. It's usually better to select products to sell that don't put you in competition with dozens or hundreds of other resellers.
• Be wary of those who claim they can help you enjoy instant success or a large income by setting up a dropship business. These are often scams.