Drop shipping is defined as selling products that you don't actually have in your possession but have made arrangements with someone who does. You get paid from your customer, you send the order to the drop shipper and they pick, pack and ship the product for you and bill you a particular amount.



For instance, you have pooper scoopers for sale on your site for $10 each. A customer comes along, orders the $10 pooper scooper, pays you $10 via whatever method you've already got in place (PayPal, credit card), you forward the order to your drop shipper via email or fax, they receive your order, pick the pooper scooper they have in stock, pack it, and ship it to your customer. Then they either send you an invoice or bill a credit card on file (more about billing & costs below).

WHAT YOU NEED TO UNDERSTAND

The beauty of this arrangement is that you didn't have to pay two cents for that pooper scooper until you sold it. You didn't have to spend any money on inventory, you didn't have to store it, you didn't have to pay an employee to pick, pack and ship. You didn't have to even touch it!

Rather then spend money on inventory that sits in a warehouse you can devote your time and MONEY to marketing and selling more pooper scoopers! Pretty sweet, right?

COSTS

Most drop shippers are product distributors who sell pet products at dealer cost. They supply retailers with products for their stores (whether online stores or brick and mortar pet stores --- doesn't matter).

Let's use the $10 pooper scooper sale as an example of what this arrangement can potentially cost:

Pooper scooper $5

Box $1

Handling fee $1

Total Cost: $7

Your Profit: $3

Note: Every arrangement is different. Some charge a service fee and some charge for packing materials. Find out before entering the relationship.

SHIPPING COSTS

The customer pays the shipping charges, that's why shipping charges were not included in the example above. It's basically a pass along cost.

NOTE: Shipping charges can also be a profit center by adding a few bucks onto the rates charged by UPS, FedEx or other delivery service.

Also, if possible, have your drop shipper use YOUR shipping account to send your items. One, you'll be making sure that you're only paying actual shipping charges and your drop shipper isn't making money on you from the shipping fees. If you don't have an account with UPS or Fedex, find out what the drop shipper prefers and GET ONE!

Most drop shippers will prefer this because it simplifies billing and if they're invoicing you they won't have to carry the extra shipping fees on the balances that you'll owe.

You'll prefer it because you'll get monthly statements from the shipping companies so you can stay on top of your costs more easily.

WHAT TO LOOK FOR IN A DROP SHIPPER

Lots of Products

Not all drop shippers are created equal. The most important thing about finding a good pet supply partner who can ship products for you is to identify one that sells a large selection of products you're interested in selling. You're basically going to be selling whatever they carry. If you're trying to establish a one-stop destination for dog toys, for instance, make sure the partner you decide to work with has tons of dog toys that you can choose from.

Reliability & Speed

Another critical aspect is how fast they can turn around orders for you. Remember, the work they do will reflect directly on you and your business. It's your reputation and name that's on the line out there --- they're "only" shipping the stuff. And when I say "only", it's because while shipping may not me very glamorous, it's where the rubber meets the road. Getting products out the door quickly and cost effectively will directly effect your customer's satisfaction and liklihood of coming back and buying from you again in the future. The worst thing that could happen is that your drop shipper repeatedly screws up your orders or takes days to ship them. You can kiss that customer good bye!

Fees

As I mentioned above, find out what the fees are in advance. Almost every drop shipper will charge them. You can't expect them to do all that work for free. But are they charging you a per item fee or a fee based on total dollar amount per order? A $5 flat rate fee on the $10 pooper scooper example above would have you breaking even or LOSING money on that sale. But on a larger $100 order a $5 flat fee is fine. Figure out or estimate your average sale per order and negotiate a fee you can both live with. I prefer a sliding scale fee structure based on the total dollar amount of the order. Smaller orders get charged smaller fees, larger ones, larger fees.

Online Access To Catalog

This may sound obvious, but make sure your drop shipper has a website so you can browse for products, get pricing, copy and paste product images as well as product descriptions. Believe me, if you wind up carrying several hundred or even thousands of items, you don't want to have to write all those product descriptions yourself and chase down all those product images and photos for your own website catalog.

PITFALLS TO AVOID

Many companies will drop ship. They don't advertise the fact but if you call and ask, more than half the time they'll say "yes". The main pitfall to avoid is getting too excited and lining up all these suppliers willing to ship your orders for you. Here's why: lets' say you offer products from 4 different drop shippers. One sells dog toys, one sells dog food, one sells cat toys and the other sells leashes. Now, let's say you get an order that includes an item from each one --- a dog toy, a bag of dog food, a cat toy and a leash? You, not your customer, will have to pay 4 SEPARATE SHIPPING FEES! You can quickly see how this can be a problem.

That's why, as we said previously, try and find one or two drop shippers, tops, that can do it all for you. One drop shipper, one drop ship fee, one shipping charge. 'Nuff said.