What is drop shipping?
Drop shipping is a supply chain management method in which the retailer does not keep goods in stock but instead transfers the customer orders and shipment details to either the manufacturer, another retailer, or a wholesaler, who then ships the goods directly to the customer.
Shopify makes it easy for entrepreneurs who want to start a business by integrating itself direct with manufacturers and wholesalers, drop shippers are a wholesalers best friend.
Drop shippers promote wholesale items from their own website and social media accounts producing more revenue for the wholesalers, in this scenario the wholesaler ships the item direct from their manufacturing plant leaving the advertising and payment processing up to the retailer.
So, the retailer takes the wholesale item (images, pricing etc) uploads it to their shopify website, then promotes the products via search engine or social media, a consumer buys the product from the retailer.
Then the retailer places the order with the wholesaler and the wholesale company then ships the product to the customer.
I want to show you a store i created a few months ago for this article, to give you an insight into how drop shipping works.
I Use Shopify as my web host because it easily integrates with wholesalers and other apps, plus it has a 14 day free trial to establish your store before paying the membership fee.
Heres a screen shot of the actual revenue i generated from my new store I created over a month ago, as you can see I’ve black out some information to protect my identity and confidential information.
This next screenshot is of the supplier I’ve decided to integrate with my store.
Again some information has been blacked out but the important pieces such as the suppliers app has been highlighted.
For this article and experiment I’ve decided to use Oberlo as my supplier, the products i sold were athletic wear. But you can sell any products within whatever niche you decide.
Oberlo integrates with your Shopify store making it easier to import products direct to your store.
You have to establish your margins such as cost to profit.
If an item is $3.87 wholesale and $1.5 shipping then the cost is $5.37, but what will your profit be? whatever you decide is a reasonable price to charge the consumer, just remember you’ll also have to cover your cost of advertising and still make a profit.
It’s literally that simple, you will however have to register your business with the taxation department or however you do it in your country, if you’re australian you’ll need to get an ABN (Australian Business Number) before or after creating your store.
The first step is creating your store! Start Today! 14 day free trial