Drop Shipping is a type of an eCommerce business model whereby you can be able to sell physical or digital products online without having to stock an inventory, without having to have a warehouse to store your products and without having to get involved with shipping and handling.
Basically, your supplier who sells the items to you at a wholesale price will be the one who handles all of your product fulfillment needs to your clients. When an order comes in, you notify your Drop Shipper and that they ship your products on to the customer on your behalf.
As a result, there's practically zero upfront cost to start a Drop Shipping online store because you don’t need to invest any money on inventory.
In fact, you'll literally start Drop Shipping for under $3 with a free open source handcart like WooCommerce. Shopify offers a free 14 day trial, and monthly fee as low as $29 per month.
Overall, Drop Shipping is the least expensive thanks to the start in eCommerce.
Is Drop Shipping Legal? Drop Shipping Is Perfectly Legal.
Drop Shipping is 100% legal as long as you obtain all of the required seller's permits, sort of a traditional eCommerce store.
After all, a Drop Shipping business is simply like all other online stores except the supplier handles the shipping and you handle the orders.
In fact, many large companies like Target, Wayfair and make & Barrel utilize Drop Shipping as a further channel for generating sales.
However, certain sorts of Drop Shipping are illegal on marketplaces like Amazon and Ebay. for instance , you're not permitted to drop ship goods from Amazon to Ebay and the other way around .
According to the terms of service for both marketplaces, purchasing products from another online retailer and having that retailer ship on to customers is against the law if the shipment doesn't identify you because the seller of the record.
However, if you simply plan on Drop Shipping for your own website (and not Amazon or Ebay), rest assured that Drop Shipping is 100% legal as long as you obtain a business license and sellers permit.
How Much Money Are You Able To Make Drop Shipping?
Drop Shipping carries a lower margin than a standard eCommerce store. For example, I even have friends who achieve 50% - 100% margins Drop Shipping perfume, jewelry, fitness equipment and enormous oversize items like stoves and outdoor grills. For example, you can sell buy a phone case for $32 but turn around and purchase it for $10, plus $2 shipping cost.
I also know a colleague who Drop Ships personalized funeral urns and caskets that command high margins because his niche isn't price sensitive.
Overall, your margins will depend upon how crowded your market is and the level of competition, for a typical Drop Ship store, you ought to assume a 10% - 30% margin on the average.
Without the necessity to hold inventory or physically ship orders out, you'll focus your efforts on marketing and sales.
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