What is dropshipping?  And how can you make money doing it?  There are plenty of people on the internet promising that you can use dropshipping to make thousands of dollars while sitting in your underoos in your living room.  But is dropshipping really all it’s cracked up to be?

What is dropshipping?

Dropshipping is a way of selling products online without carrying an inventory.  Basically you post products online, whether on eBay or your own website, and when you make a sale, you order the product from the dropshipper.  The dropshipper then mails the product directly to your customer.

Is dropshipping really as easy as everyone says?

NO!  Dropshipping is NOT easy.  Running a dropshipping business is as challenging and consuming as operating any other kind of business.  It requires a huge investment of time and some money.  So don’t think you’re going to set up your online business in an hour and then watch the cash roll in.

Why should I dropship?

Dropshipping allows you to sell products online without carrying an inventory.  This means you don’t need to invest money to buy a huge stock of products, and you don’t have to run the risk of having a garage full of unicycles that aren’t selling.

However, you will still have to invest money to get your Reseller’s Permit and Tax ID Number, to find quality suppliers, to set up a website or eBay store, and to market your online business.

What are the negatives of dropshipping?

• You won’t always have as large a profit margin as you would purchasing wholesale.
• Not all products are available through dropshippers.
• You don’t have as much control over inventory levels and shipping methods.
• It’s more difficult to run certain kinds of promotions.

How do I start dropshipping?

1. Get your Reseller’s Permit and Tax ID Number

This will allow you to work with the best dropshippers and to file your taxes correctly at the end of the year.

2. Find a quality dropship supplier for whatever products you want to sell online

It is extremely important that you work with a good supplier, not a scam artist or middleman.  You won’t make any money otherwise.

3. Set up an account with your supplier

This does not cost any money – you just have to give them some personal information, including your Reseller Number.  The dropship supplier will email you a pdf file with their product descriptions and images.  You can then start posting these products on your website or eBay store.

4. Start posting products online

You can sell dropship products from a personal website, on eBay, from an eBay store, on Bonanzle, or pretty much anywhere online.

How do I find quality suppliers?

You can search for suppliers through Google or by attending tradeshows and other events.  Most of the people you will find on Google are middlemen.  A middleman is not the manufacturer or distributor of the product.  They are someone who buys the product from the manufacturer and then sells it to you at a marked-up price.  Unfortunately, you will not be able to sell your product for even more money, because the price has already been marked-up.  The easiest way to spot a middleman is they offer thousands of different products.  A real manufacturer or distributor only supplies one kind of product.  They don’t make baby carriages, and also golf clubs and model cars and baseball uniforms.  Tradeshows, by contrast, are actually a great way to meet manufacturers.  Unfortunately travelling to Vegas, Miami, Toronto, etc. to attend them is very expensive.

The best way to find quality suppliers is through a database.  Wholesale Match can find you quality dropshippers for virtually any product.

Why should I use Wholesale Match to find dropship suppliers?

Wholesale Match is not the only database of dropshippers and wholesalers, but we are the only ones who offer the following 3 services:

1. We do the work for you

You don’t need to spend hours combing through our database.  Simply submit a list of products, and our Research Team will email you a list of dropshippers and/or wholesalers for those products within 3 business days.

2. We actively search for new suppliers

If we do not currently have a dropshipper for the item you are looking for, we will actively search until we find a supplier that works for you.

3. We offer a 100% money-back guarantee on our annual membership

If you don’t make back at least the cost of your membership, we will refund it in full at the end of the year.  We only ask that you email, submit a research request, call, or livechat us at least once a month so we have a chance to work for you.

For more information on finding dropshippers, email support@wholesalematch.com or call 801-938-4718.

dropshippers, dropshipping, finding suppliers, selling products online

Wholesale Match has recently added six new videos to our education section.  The instructional videos walk you step by step through researching products on eBay, calculating the profit margins of potential products, ordering from dropshippers, and more.

The new e-commerce education videos are titled as follows:

Research Products on eBay

The Retailer’s Site

The Profit Calculator

Completing an Order

Sales and Coupons

and

Saving Images and Descriptions

All Wholesale Match members have full access to our educational materials including the videos, articles, blog posts, and Daily Deals products.  If you are not currently a Wholesale Match member but would like to try our services free for one week, simply sign up for a free 7 day trial on the homepage.  In addition to the educational resources, you will have access to our extensive database of dropshippers and wholesalers so you can find a supplier for your online business.

If you have any questions, or if you have any difficulty in signing up for the trial or viewing the videos, please email the customer service team at support@wholesalematch.com or call 801-938-4718.

Education, finding suppliers

Often, one of the biggest frustrations for people located outside the United States who are trying to start an online business is the fact that they’re not American.  You would think that e-commerce is global, but in fact many suppliers only want to work with Americans and many online businesses located in the States don’t want to ship outside their own country.  However, if you’re not American, all is not lost – you can still dropship-retail.

First, some background on dropshipping:

Dropshipping is a well-established supply-chain management system in the United States, but it is not quite as common in other countries yet.  In the good old US of A, state laws help facilitate this kind of trade, but in places like Canada, the various provinces have tax strictures which make things a little more difficult.  The good news is that dropshipping is becoming increasingly prevalent in countries outside the US.  If you’re located in Canada, Australia, or the UK, rejoice because more and more suppliers are offering dropshipping in your respective countries.

What are your options if you want to dropship products but you don’t live in the US?

1.Use local suppliers

Using local suppliers will allow you to bypass customs issues and avoid problems like American suppliers who demand an American Reseller’s Permit and Tax ID Number.  The downside to using only local suppliers is that your selection of suppliers and potential products will be more limited.  If you can’t find a supplier for your desired product, you might consider isolating the manufacturers you would like to work with, and ask if they would be willing to set up a dropshipping, wholesale, or affiliate program with you.  Many companies are interested in the concept of dropshipping and might be willing to jump on the bandwagon if you demonstrate how it would be beneficial to their business.

2.Use American dropshippers

Some American dropshippers and wholesalers have no problem shipping outside the country, and will accept foreign documentation such as a Canadian business number in lieu of an American tax ID number.  Canadians are particularly able to take advantage of American suppliers because the North American Free Trade Agreement (NAFTA) allows many products to be shipped duty-free if they are for customer’s personal use (they usually have to be manufactured in either Canada or the US, however).  It is certainly worthwhile to look at the available American suppliers in addition to the ones located in your own country.

3.Sell to Americans

If you are having a difficult time getting products shipped to customers in your own country, this may be a solution.  Selling only to Americans allows you to use US dropshippers who won’t ship outside the country, and you don’t have to worry about cross-border hang-ups or local tax laws.  You will still have to pay taxes on your income to your own government, but you won’t have to worry about currency exchange or any of the other issues attendant with international sales.  You may still encounter issues providing suppliers with documentation or setting up merchants accounts to receive your payments.

4. Use Asian Suppliers

As a person located outside the US, you may find that you can use cheap suppliers from countries that are not as accessible to Americans.  For instance, if your country is close to China, you can use a wealth of inexpensive Asian suppliers that are more prickly for Americans to use due to the time and expensive of shipping something all the way from China to the US.

5. Switch Products

All would-be online entrepreneurs may have to switch their product idea if they can’t find a good supplier.  This is even more true when your supplier pool is limited.  Remember, the important thing is to sell a product you can make a profit on; it’s not as important that you absolutely love hostess aprons or chess sets or whatever it is you can find an excellent supplier for.

Other Tips:

Don’t Overlook Local Products

If you’re located in some exotic foreign locale, you should see that as a strength, not a weakness.  I strongly recommend that you examine your local products when searching for something to sell online.  Australian skim boards, Indian henna kits, Moroccan sandals, Balinese jewelry, these may seem like common products with a saturated market in your area, but that doesn’t mean they’re saturated online.  I frequently receive requests from Americans who want to sell Australian skim boards, but the Australian suppliers won’t dropship to them.  This means that if you’re Australian, you’re actually in luck.  Now, obviously shipping is a factor when selling to international customers (bulky, heavy products may not be profitable to ship to overseas), but there are many local products that you can sell on eBay or from a personal website to great effect.

I’m not going to lie and say that dropshipping is equally easy from any country, but I do believe that if you’re flexible you can be successful.  You may not be able to sell the product that you first had your heart set on, or use the supplier you first wanted, but there are doubtless other products and suppliers who will work just as well once you find them.  At Wholesale Match we can help you find suppliers no matter what country you live in.

dropshipping, finding suppliers

Some of the most common questions I receive on this forum are “How do I find a dropship wholesaler?” or “How do I find suppliers?”.  Most people have at least heard of dropshipping, but there is some confusion as to what a dropship supplier does exactly.  For instance, the term “dropship wholesaler” is not really accurate.  A supplier EITHER dropships OR sells wholesale.  They are not the same thing.

What is a dropshipper?

A dropshipper processes individual orders and ships them directly to your customer.  When you make a sale on your website or on eBay, you order the product from the dropshipper and have it sent directly to the buyer.  A dropshipper may offer you wholesale prices, but generally they charge some kind of dropshipping fee and you purchase orders individually, not in bulk wholesale lots.

What is a wholesaler?

A wholesaler sells bulk orders of products, say, 20 t-shirts or 100 candles.  You keep the product at your house or in a storage facility and you process and ship your own orders.  Selling products this way is more time-consuming and requires a greater investment, but you usually get the products more cheaply than you would from a dropshipper.

How can I find suppliers?

There are many ways to find suppliers.

• Google Searches: You could perform a Google search, say for “bowling ball dropshippers”.  Unfortunately most of your results would be middlemen masquerading as legitimate dropshippers, or international suppliers from places like China.  Even if you did find a legitimate dropshipper this way, it would be the same dropshipper a hundred other people could find.
• Trade Shows: Trade shows are actually a great way to meet quality suppliers.  The only downside is the time and expense of attending trade shows in places like Las Vegas.
• Databases: You can use a quality database to find suppliers.  If you choose this option, remember that not all databases are created equal.  Some databases are never updated, have very few suppliers in each category, or do not screen out fradulent suppliers.

Wholesale Match’s database is continually updated: we add new suppliers every week.  We have many suppliers in each category, and if we don’t have a supplier for the product you’re looking for, we will actively search until we find a supplier that works for you.  If we receive a complaint about a supplier, we investigate and remove them from the database.

Wholesale Match is the only database that has a Research Team who will do the work for you and provide professional results.  Wholesale Match is also the only database that provides a 100% money-back guarantee if you do not make back the cost of your membership (as long as you use our services at least once a month).  For these reasons, I would recommend using Wholesale Match to find dropship and wholesale suppliers.

finding suppliers, wholesale

Dropshipping 101

The first step of starting  dropshipping business is to find a great supplier for your products.  Unfortunately, it’s not easy to find a quality supplier.  There’s no Yellow Pages for the real professionals, and there are a boatload of scam artists and middlemen masquerading as legitimate dropshippers and wholesalers.  They make their money off membership fees and selling you products that are too expensive for you to resell for a profit online.  How can you avoid middlemen and find a quality dropshipper or wholesaler who will provide you with products that will allow you to make money online?

If it sounds too good to be true, it probably is.

There are plenty of supposed dropship or wholesale suppliers who will allow anyone to sign up and who promise to supply thousands of different products.  If there are no restrictions to sign up with them, they are probably not a legitimate business.  A real wholesaler must by law get your Reseller’s Permit and Tax and ID number, otherwise, they are not allowed to sell you products tax-free for resale.  If they don’t bother to do this, they are probably actually selling you products retail and calling it wholesale.  The fact that they have thousands of products of all types isn’t a good thing either.  It’s impossible that they are manufacturing or even importing all these products themselves.  More likely they are purchasing their products from dozens of different suppliers and reselling them to you.  Thus, they are a middleman, not a legitimate supplier.

Don’t dropship with the Invisible Man.

If the company seems to have no history with the BBB or other agencies, no successful online businesses they are currently supplying, and no physical address where their warehouse is located, you are probably in communication with a scam artist.  A legitimate dropshipper or wholesaler shouldn’t be evasive or sketchy about their business details.  One of the biggest red flags is if they refuse to give you product information until after you pay some kind of fee.  A real dropshipper/wholesaler will send you a pdf file with all their products and prices, or provide a login to a reseller’s website.  Prices and products are only kept secret when they are not really provided at wholesale prices or when they don’t exist at all.  Which brings me to my third point:

Finding a dropshipper shouldn’t be like buying a gym membership: don’t pay hefty sign-up fees.

You should also never pay an exorbitant fee to sign up with a supplier.  A small processing fee of less than $20 isn’t unreasonable, but anything over that is the sign of a scammer.  Don’t confuse sign-up fees with dropship fees: many dropshippers charge a dropship fee, but that is to cover shipping costs and is only charged when products are ordered and shipped.  Dropship fees usually range from $1-15 per order.  Wholesalers may require minimum order amounts, but again this is not a sign-up fee – the money is used to purchase products, not pay the supplier.

Manufacturers are your goal.

The person you really want to buy your products from is a manufacturer.  In some industries that isn’t possible and you are required to purchase from a distributor.  Middlemen are your last resort.  It’s possible to make money buying and selling products from a  middleman, but more often the cut they take won’t allow you to make a sufficient profit.  Your goal is to buy straight from the source, the manufacturer.

Use a reliable source to find suppliers.

You may get lucky and find a good supplier through a Google search or a free directory, but every Tom Dick and Harry has access to the same free sources you do.  Most legitimate suppliers don’t post their information online because they don’t want to be hassled by a bunch of would-be entrepreneurs.  Your best bet is to find real dropshippers and wholesalers is to pay for access to a quality database.  If you decide to use Wholesale Match’s database, our Research Team will do the work for you.  We also guarantee that you will make the cost of your membership back within a year, or we will refund the annual membership fee in full (as long as you give us the opportunity to work for you at least once a month).

dropshippers, finding suppliers, wholesale

Wholesale Match is not the only database of dropship and wholesale suppliers, but we like to think of the other guys as MacDonald’s while we are Le Caille.  After all, any burger will get you full, but a real meal satisfies the soul.  We like to satisfy the soul.  Thus, while Joe Shmoe will give you a login password and set you loose on his database, we run a full-service operation: educational articles, a full-time support line if you have any questions about dropshipping, website design, SEO, or what you should buy your Aunt Mildred for her birthday, eBay resources, and finally our Research Team.  The Research Team exists for the sole purpose of doing the research for you.  If you are looking for suppliers for hockey sticks, Christmas ornaments, bowling balls, or anything else, simply submit a Research Request to our Research Team and they will provide you with an extensive list of dropshippers, wholesalers, and/or affiliates in 1-3 business days.

photo credit: Duchamp
photo credit: gbrunett

The following are answers to some FAQs about Research Requests:

How do I submit a Research Request?

Simply login to the Wholesale Match website at www.wholesalematch.com, click on the “Suppliers” button, and then scroll down the page.  On the lower left-hand side you’ll see a button that says “Can’t Find What You’re Looking For?  Submit A Research Request.”  Click that button and the submission form will pop up.

Why not just search the database myself?

You are more than welcome to do that, but you will probably want to also submit a Research Request for the following reasons: First, we’re better at searching than you are.  We’re familiar with the suppliers in our database and we know the best suppliers for your specific product.  Second, we have access to more suppliers.  While we update our database regularly, we find dozens of new suppliers each week and may have located a new one for the product you’re looking for.  Third, if there is a paucity of suppliers for the product you’re looking for, we will search until we find more.

Are there any guidelines when submitting Research Requests?

While Wholesale Match customers have unlimited Research Requests, we generally ask that you limit your requests to five products at a time so we can allocate our resources fairly.  Once we email you a list of suppliers, you are welcome to submit a request for five more products.  We are often able to return Research Requests within 1 business day or even a few hours, depending on the products requested.

How do I get the best results from my Research Request?

The more clear you are, the better.  You are welcome to ask for specific brand names or styles or types of products, though of course you will get more results if your category is still reasonably broad.  You can specify if you don’t want international suppliers, if you are open to wholesalers as well as dropshippers, and so on and so forth.  If there is any confusion about your Research Request, you can always call our customer service line to clarify.

Your time is valuable, and the Wholesale Match Research Team will save you countless hours searching for suppliers.  If you have not already taken advantage of their services, I urge you to do so.  If you have submitted a Research Request in the past, I would recommend doing so again, as they may have found additional suppliers for your products in the meantime.

dropshipping, finding suppliers, wholesale

The following are testimonials from Wholesale Match members who have successfully used our services to make money online (surnames have been truncated for privacy reasons):

“I am very happy with the support I have gotten with Wholesale Match. They have helped me greatly in finding wholesalers as well as dropshippers. Thank you.”

-Mike N.

“I joined Wholesale Match a few months ago and have thoroughly enjoyed working with your company. I am still a member and wouldn’t hesitate to pass along positive thoughts to anyone that was interested or searching for the right kind of help…I have every intention of staying with your company indefinitely. Best wishes to all.”

-Sylvia C.

“I was able to find a supplier through wholesalematch.com that I can use for my dropshipping. And a company that made it very easy for someone who is a complete novice. I am most grateful for the companies I was able to find. Again, many thanks.”

-Hilary G.

“As a new member to Wholesale Match I am very excited and pleased with this very helpful service. Originally I joined as a regular monthly membership and had an employee contact me and introduce himself. He then asked how he could help me…Within the last couple days, I have used the Research Team to help me find contacts, which has saved me much needed time but also gave me the information I was looking for right away in a quick response. I am glad I have joined and can’t wait to watch all the training videos and start making some money with your help. Thanks for such a great service.”

-Howard C.

“I had been making exhausted searches of the Internet for suppliers for my new online business, but everyone wanted store fronts, companies that purchase huge minimal orders, or established long-term contract companies. Wholesalematch.com was able to supply me with quality, reliable, affordable manufacturing contacts who also agreed to do my dropshipping, eliminating my need for minimum orders, worrying about shipping delays, inventory, storage of products, and ensuring that I could sell quality products on my website.”

-Judy K.

“I cannot say enough about wholesalematch.com. I use it every day and have made some good contacts to a lot of dropshippers. It is one of the best sites I have ever been to. I am so happy to be a part of wholesalematch.com. It is easy to maneuver through the site and every link works well. Thanks.”

-Debra M.

“Wow, working with Wholesale Match has really made finding a supplier a lot easier. It really takes the hassle out of the work, especially in finding specific kinds of suppliers. I really appreciate what this company has done for me as an entrepreneur in eCommerce.”

-David N.

“I am a Healthcare Professional totally oblivious to the whole concept of Internet/Online business. I just opened the Wholesale Match website one day out of nowhere. But one click took me to the world of surprises. I was barely starting to realize that a common person like me can also have an online business for some extra bucks. For someone like me who didn’t even know what a dropshipper is, Wholesale Match came as a blessing. The tutorial videos were very helpful in guiding me step by step on how to start looking for what sells, how to do your research, how to set up a PayPal account, how to successfully sell on eBay, and much more…no matter how many businesses you want, Wholesale Match will find you a reliable, committed, and legitimate dropshipper/wholesaler after their extensive research…You can never be wrong with your decision to choose Wholesale Match for your online business venture…Thanks a lot to the entire team.”

-Shama V.

“Any request for suppliers has always been provided back within a 24 hour turn around which is great! I also liked that the person who responded provided additional information about certain suppliers, this information helped me to choose at one glance if I was going to reach out to that supplier.”

-Mary F.

Here at Wholesale Match the success of our members is our highest priority.  If you have any questions about the services we offer, or if you are a current member and require assistance with any aspect of your online business, please email us at support@wholesalematch.com or call our customer service department at 801-938-4718.  Customer service reps are standing by Monday to Friday, 9-5 MST.

finding suppliers, make money online

photo credit: Cliff Beckwith

Here at Wholesale Match we are dedicated to providing our customers with the absolute best service.  Besides our comprehensive database of dropshippers and wholesalers, we offer individualized attention, including doing the research for our members, providing educational materials, and having a customer service team on hand to answer any and all questions via phone, email, or livechat.  We will do whatever it takes to help our members be successful.  Because we have a 100% money-back guarantee for our services, it’s really in our own best interest   The following are testimonials from Wholesale Match members we have found quality dropshippers and wholesalers for, and otherwise helped them get their online businesses up and running.  (For privacy reasons I have omitted last names.)

“Hello, a big thanks!  Every request I sent was promptly replied to.  I am very happy with your services, the choice of suppliers, etc. Bravo!”
-Nadine S.

“Hi,
“Wholesale Match sent me 5 possible dropshippers for products I was looking for…They have lots of products that match what I was looking for.  I sold one of the products just days afterwards.  Thanks.”
-Judy D.

“I always dreamed of finding suppliers online who would be above board and those who won’t strike fear into your heart when considering using them.  Wholesale Match was the friend in time of need who provided the right suppliers at the right time.  Now I am on my way in my business, working with suppliers who are great to say the least.  Thank you Wholesale Match!  You saved the day!”
-David A.

“Hi, I just launched my website last week.  Thanks to Wholesale Match I found a great supplier that I think will work out beautifully.  Your support group was very helpful during my research for a supplier and pointed me in the right direction.  Thanks for all your support.”
-Barbara S.

“Wholesale Match is great!!!  I am new at starting an online business and found Wholesale Match.  It was the best thing I could have found!!!  Just about anything you can think of they have the leads you need and the tech support is fantastic.  From simple questions to confusing information they figure it out.  What a great team to work with!!! I’m now on my way to making a living at this.  Thank you Wholesale Match!!!”
-Deborah B.

“I’m just beginning the journey of starting an internet business.  Wholesale Match has been a tremendous help.  I called today and talked to the kindest lady who took time with me as a beginner and encouraged me along the way after a very discouraging day.  I’m so happy to know there is someone to contact with my most basic questions to get me over the hump and on my way.  She encouraged me to take advantage of your services and make my questions and requests known.  She also encouraged me to call when I need extra help.  It was very positive as I struggle to grow and learn.  Thank you.”

-Sandy K.

photo credit: Muneef Hameed

Yes, we’re tooting our own horn a little re-printing these positive comments.  But the reason is that we have a genuine desire to help our members be successful.  We want every online entrepreneur’s experience to be like the ones above.  We know we have great suppliers, great educational materials, and fantastic customer service and research teams.  If you are not currently a member, or are not taking advantage of the full range of Wholesale Match’s services, I urge you to do so.  Your success is our goal.

dropshipping, finding suppliers, make money online, online business

Finding a great supplier is one of the most important steps in setting up your online business.  Whether you’re looking for a dropship or wholesale supplier, I would advocate using Wholesale Match, since we have thousands upon thousands of quality dropshippers and wholesalers in our database, and we add new ones every day.  The Research Team will actually go out and find new suppliers for you if you haven’t found what you’re looking for in the database.  But even after we find you some solid potential suppliers, you’re going to have to do the work to get set up with them, including contacting the suppliers, setting up an account, and negotiating your terms.  The following are some common pitfalls would-be online business owners often encounter while getting set up with suppliers:

First: Explain clearly what you’re looking for when you call a potential supplier. I can’t tell you how often people call the customer support line and say, “You sent me a supplier for ping pong paddles, but I called them and they don’t dropship.”  Then the customer service team calls the supplier back to see if their policy has changed, and in fact they do dropship.  What goes wrong?  Often when somebody calls a potential supplier, they don’t really explain what they’re looking for.  Some companies dropship every day, but aren’t familiar with the term “dropshipping”.  Some will tell you that they only wholesale, but they have no minimum and can ship to any address, so they are in effect actually a dropshipper.  Communicate with your potential supplier, and take the time to learn about their company.  Don’t just ask one or two questions and then hang up the phone.

photo credit: alicepopkorn

Second: Be prepared to use more than one supplier. For convenience sake, many people want a supplier who can provide them with all their products in one place.  So if you were selling, say, meditation stones, yoga mats, and seaweed facial masks, you might expect your supplier to stock all those items.  However, they might carry only yoga supplies, or only spa items like seaweed masks.  You might have to use two or three or even six or ten suppliers to get the range of fantastic products you’re looking for on your website.  Sometimes you’ll get lucky and find a supplier who carries everything you want at a great price, but usually you’ll find a better deal shopping around, using a few different suppliers.

Third: Have your business plan ready long before you start supplier-shopping. Do your product research, plan exactly how you’re going to market your website, and have your budget laid out.  That way, when you finally call a supplier, you’ll sound like a professional and they’ll be excited to work with you.  Imagine for a moment that you were a distributor of soccer cleats, and some random guy called you and said, “Hey, I’m thinking about maybe selling soccer stuff online, but I dunno, I might do golf.  But probably soccer, at least for now.  Wanna supply me with cleats?”.  Not likely.  While most suppliers are happy to start a partnership with a new retailer, they want to work with solid entrepreneurs who have their stuff together.  They may ask you questions about your projected sales volumes, credit score, website, etc., and you need to be able to answer intelligently.

Fourth: Get your Reseller’s Permit and Tax ID Number. A lot of people try to get around obtainng their Reseller’s Permit and Tax ID Number by using suppliers who don’t require them, but the best suppliers want proper documentation, and anyway, it’s the law.  Spend the time and the little bit of money it will cost you: it’ll save you a mountain of problems later on.  A Reseller’s Permit is required to purchase products tax-free for resale purposes, and a Tax ID Number is necessary to submit your taxes at the end of the year.  If you want your online business to be successful, treat it like a real business and set it up properly, without taking short cuts.

Fifth: Be prepared to pay initial order costs. If you want to start an online business, you need capital.  Some e-business newbies believe they will be able to get their website up and running and start selling products for $100 or less.  The truth is, there are going to be additional costs.  One of these costs might be initial orders from suppliers.  While many dropshippers have no fees to sign up and will allow you to ship individual orders, others require you to make a large initial order or put down a deposit before they’ll work with you.  This is rare, but more common with certain categories of products like clothing.  After your first $100-500 order, suppliers are usually willing to do single orders, or a much smaller volume.  You could choose not to work with suppliers who require a deposit or larger initial order, but unfortunately you would be cutting out some of the best dropshippers and wholesalers.

dropshippers, finding suppliers, wholesale

Dropshipping is an expanding marketing system in the US: every day more manufacturers and distributors are joining the ranks of companies who dropship their products to retailers.  It’s a symbiotic relationship that benefits both the manufacturer/distributor and the retailer.  The manufacturer/distributor is able to sell more of their products because they have other retailers promoting and selling them.  The retailer is able to sell products online without spending a lot of money upfront or carrying inventory.  They only buy what they’ve already sold, so they’re never stuck with excess merchandise and are spared the costs of storing and packing products.

The following is a list of questions people frequently ask about dropshipping:

photo credit: amboo who?

Do I have to pay to set up an account with a dropshipper?

No, most dropshippers do not charge any money to set up an account with them.  Some may have a small administration fee, less than $20, but even that is rare.  If they are trying to charge you to set up an account or to simply view their discounted prices, they are probably not a legitimate dropshipper.

What do I need to set up an account with a dropshipper?

Requirements vary by company.  Some dropshippers require you to have a reseller’s permit or tax ID number.  People try to avoid getting their reseller’s permit and tax ID number, but this limits who you can work with (the best suppliers require it), and isn’t legal anyway.  Anyone who resells products is supposed to have a reseller’s permit and tax ID number (the former allows you to avoid paying taxes on the goods you purchase for resale and the latter is necessary to pay your taxes at the end of the year).  You can apply for them through your state agencies and they are not particularly expensive or difficult to get.  Some dropshippers will also expect you to have your website set up, or at least a URL you can give them even if it’s not operational yet.

How do I know if a dropshipper is legitimate?

The quality of their website and customer service is a good indication.  The best dropshippers are those who manufacture the product themselves (no middleman), though profit can also be made working with a distributor who purchases directly from the manufacturer.  This is particularly helpful when the manufacturer is located in Asia and you don’t want to deal with customs and language issues.  A legitimate dropshipper offers products at a significantly discounted rate and does not charge exorbitant fees to sign up with them or to ship the products.

What kind of profit margin can I expect working with a dropshipper?

Your profit won’t be quite as large working with a dropshipper as it might be buying from a wholesaler.  Most wholesale companies offer their products at approximately 50% of retail.  Your dropship profit margin might be closer to 75%.  The important thing is that once all dropship fees, shipping costs, etc., are taken into account, you are making an acceptable amount of money off each sale.  An “acceptable amount” is an individual decision – only you can decide what your time is worth.

photo credit: hickoryhollow113

Are there any other fees associated with dropshipping?

Again it varies company to company.  Some dropshipping companies charge you exactly the cost of shipping, others add a $3 or $5 fee per order to cover storage and packing.  As long as your profit margin is still satisfactory, fees are acceptable, though obviously not desirable.

Can I negotiate with dropshippers?

Definitely.  If you can present them with a compelling business plan or just impress them in general, they may give you a better deal than the average Joe.  Many dropshipping companies provide volume discounts or better prices to retailers they have worked with for a long time.  It’s not out of place to ask for a better discount or a smaller dropship fees as long as you are not too pushy about it (you don’t want to lose the supplier entirely).  It’s better to try this after you’ve successfully sold their products for a few months.

How do I contact a dropshipper?

Make sure you’re prepared when you call the company (calling is better than emailing unless they specify that they prefer the latter).  Dropshippers don’t have to do business with you, and if you don’t impress them with your professionalism and organization, they probably won’t.  They stand to lose money working with you, so you have to prove your reliability.  At the very least, you should have a business name and a business plan in place.  Having a website semi-set up is also helpful (obviously you need the dropshipper and their products to set up your website entirely).

What if a dropshipper won’t work with me?

You can’t make them, but you can certainly try.  If they don’t respond to your phone call or email, than try again.  Be persistant.  If they seem hesistant once you get them on the phone, than convince them.  Show them the benefit to their company of working with you.

What if I find a product I want to sell, but the company doesn’t dropship?

Not all companies dropship.  More are starting every day, but there are some elite brands and huge companies that dropshipping doesn’t make sense for.  It works better for small to medium-sized companies who are trying to grow their sales and exposure, not a high-end brand like Apple that already has plenty of exposure and is trying to protect its elite status.  If you find a company who has a great product you really want to sell, you may be able to convince them to dropship.  Like I said above, show the benefit to their company.

Once I have an account set up with a dropshipper, what happens next?

Usually when you set up an account with a dropshipper they will provide you with a catalog and/or images and descriptions of their products.  You post these images and descriptions on your website or on eBay.  When a customer makes a purchase, you take their payment, then order their product from the dropshipper.  The product is shipped directly to the customer, and you keep whatever is left over after you pay the dropshipper.

Will the customer be able to tell the product came from someone else?

Some dropshippers provide “blind” dropshipping – either the package is blank/nondescript, or the package and packing slip have your business name printed on it.  Other dropshippers do not provide this service.  Sometimes the package has your company name on it, but the packing slip has the dropshipper’s name.  You have to verify with the dropshipper exactly what their procedure is.  Some customers may be annoyed if they realize the package came from a different company than they expected and others won’t care as long as they got what they paid for.  They wouldn’t have bought the product if they didn’t think it was a good deal, so they probably won’t notice or care where it shipped from.

photo credit: B Rosen

Who handles returns and customer service?

Again, this varies according to the dropshipper, so check with the individual company.

How do I know what products to dropship?

Almost any product can be sold online for a profit.  The pertinent factors are how cheaply you can get it from a supplier, whether the market is oversaturated, and how you plan to market it.  Check out the blog posts “Products You Can Sell Online For A Profit” part 1 and part 2 if you are having trouble coming up with ideas.

Can a wholesaler be used as a dropshipper?

Yes, if a wholesaler has no order minimum, than you can order products as they are ordered from you, and have them shipped to the customer.  Sometimes wholesalers have no minimum, but they require a large initial order ($300-1000).  It might be worth it to make this large initial order if you are fairly certain the products will sell and you really want to use the supplier for smaller orders afterward.

How do I find dropshippers?

It’s not easy to find dropshippers using a search engine.  Many are nowhere to be found on the SERPs, and most of the top hits are databases, middlemen, or services that purport to set you up with suppliers (usually international manufacturers).  There’s nothing wrong with using a database; it will get you more results faster than you would find on your own.  But they usually cost money, so make sure you research your options before handing out your credit card information.  Obviously, I think Wholesale Match is the best database because we have a Research Team who will do the work for you, but by all means, check them all out before you make a decision.  After all, the quality of your suppliers in large part determines the success of your online business.

photo credit: Brooks Elliott

dropshippers, dropshipping, finding suppliers, product research